Deferred Tax Asset question
Received this question during an interview with a BB: How do depreciable and amortizable assets & foreign tax credits give rise to deferred tax assets?
I have some understanding regarding foreign tax credits (but not sure if my intuition is correct). From my understanding, foreign tax credits give rise to a deferred tax asset when you have paid or accrued the tax on foreign income. Thus, you can use this tax credit to reduce your U.S. tax liability (and avoid double taxation).
For depreciable and amortizable assets, do deferred tax assets arise due to a more aggressive depreciation schedule? i.e. you depreciate assets aggressively and effectively front-load your depreciation expense. As a result, you appear to be paying less in taxes in your GAAP books, but in your tax books you are paying more (since tax authorities may not recognize your aggressive depreciation schedule).
Any further intuition is greatly appreciated!!
Thanks
bump
bump
Quasi enim repellendus est ea. Repellendus quaerat consequatur voluptas eveniet.
Impedit vitae culpa aspernatur optio at sed enim numquam. Reprehenderit molestias quibusdam in autem nisi accusantium.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...