Deferred tax-income tax-financial statement, Financial Accounting

Deferred tax

A company may enter into transactions in the current financial period that may result in the firm either paying or saving some tax in the future. The tax that may be paid or saved in the future is called deferred tax that may be paid in the future is called deferred tax liability whereas tax that may be saved in the future is called deferred tax asset.

Previously accountants used to compute deferred tax using the income statement approach. Under this approach, the difference between profit before tax and taxable profits was simply referred to as a difference. This difference was classified into permanent and temporary timing differences.

Permanent differences related to those items that are adjusted for tax in the current year and will never be adjusted for tax in the futureĀ  E.g. Donations to political parties.

Posted Date: 12/12/2012 12:32:37 AM | Location : United States







Related Discussions:- Deferred tax-income tax-financial statement, Assignment Help, Ask Question on Deferred tax-income tax-financial statement, Get Answer, Expert's Help, Deferred tax-income tax-financial statement Discussions

Write discussion on Deferred tax-income tax-financial statement
Your posts are moderated
Related Questions
The common stock of Warner Inc. is currently selling at $114 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share

Moore Corportation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings (the corportation uses the nearest ful

QUESTION 1: The Alpha Company Ltd was registered with Nominal Capital of 60,000 Equity shares of Rs.10 each. The following were the ledger balances on 31st March 2011.

Q. What is Financial Statements? Financial Statements - Presentation of financial data involving BALANCE SHEETS, INCOME STATEMENTS and STATEMENTS OF CASH FLOW or any supporting

Part I: Wal-Mart Stores Inc.'s income statement and balance sheet are attached. Gather relevant information from the financial statements to calculate the financial ratios, and co

Terry Marks is a well-known architect. He wants to start his own business and convinces Rob Norris, his cousin and a civil engineer, to contribute capital. Together, they form a pa

DEFINITION OF BANKRUPTCY Bankruptcy is another key area of accounting . The issues addressed here deal with the properties of an individual (a sole trader or partner in a partner

Q. A ltd. Company has equity share capital of Rs. 5,00,000 divided into shares of Rs. 100 each. It wishes to gain further Rs. 3,00,000 for expansion cum modernization plans. The co

Ortiz Motors sponsors a defined-benefit pension plan for its employees. On January 1, 2013, the company's records showed the following account balances relevant to this plan: Plan

Assessment Criteria: Student work will generally be assessed in terms of the following criteria: 1. Preparation of correct journal entries. 2. Accumulation of journal entr