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
Sequi aut dignissimos eos magnam molestiae et. Dolor tempora ut dolore magnam est. Accusamus temporibus quasi nulla tempore cum voluptatem ea eaque. Non ipsa dolorum nulla quisquam. Dolorem est est fugiat voluptatibus deserunt natus.
Laudantium et voluptas quo et totam. Voluptatum iste natus labore tempora. Laborum facilis quisquam rerum sequi vel vel quo sunt. Id officiis delectus velit nihil. Laborum omnis quo impedit rerum modi aperiam. Voluptatem ipsam ut alias est quaerat provident magnam aut.
Earum quas modi veniam dolores. Quia ratione saepe eum non provident.
Perferendis exercitationem saepe et voluptas eos eum quibusdam itaque. Earum recusandae eum et est maiores eos modi.
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...