How are deferred tax assets and deferred tax liabilities derived? How do they relate to the difference between tax expense and taxes payable? How could an organization have a tax receivable? Why is the tax expense reported on the income statement comprised of current and deferred tax? An asset on a company's balance sheet that may be used to reduce any subsequent period's income tax expense. Deferred tax assets can arise due to net loss carryovers, which are only recorded as assets if it is deemed more likely than not that the asset will be used in future fiscal periods. It must be determined that there is more than a 50% probability that the company will have positive accounting income in the next fiscal period before the deferred tax asset can be applied. If, for example, a company has a deferred tax asset of $25,000 on its balance sheet, and then
This is the end of the preview. Sign up
access the rest of the document.
This note was uploaded on 08/14/2011 for the course ACCT 423 taught by Professor R.becksted during the Spring '09 term at University of Phoenix.