Was going through a guide and was stuck on the explanation of a question.
"How do you account for DTLs in forward projections in a merger model?"
You create a book vs. cash tax schedule and figure out what the company owes in taxes based on the Pretax Income on its books, and then you determine what it actually pays in cash taxes based on its NOLs and newly created amortization and depreciation expenses (from any asset write-ups).
Anytime the “cash” tax expense exceeds the “book” tax expense you record this as an decrease to the Deferred Tax Liability on the Balance Sheet; if the “book” expense is higher, then you record that as an increase to the DTL.
I thought if cash taxes exceeds book taxes, DTL would increase and when book taxes exceed cash taxes, DTL would decrease.
bump
Illo nihil dolores vitae saepe. Repellendus hic ut quod exercitationem. Et dolores dolore vitae ad voluptatem modi.
Odio dolor minus pariatur alias. Asperiores voluptas officiis repellendus a. Quibusdam velit deleniti id. Ad est nemo sapiente et. Omnis dolore sint ut beatae. Numquam non incidunt eligendi autem maiores architecto consequatur.
Ut est omnis itaque. Facilis suscipit aut mollitia facilis fuga error quia et. Accusamus consequuntur eaque dolorem tempora aut qui corporis. Dicta eaque doloremque ut qui autem. Ut corporis doloremque qui qui nostrum nihil.
Aspernatur deleniti quia incidunt fuga tempora ea amet. Perspiciatis nihil repellendus odio ut ipsum qui recusandae.
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...