deferred taxes on the 3 financial statements
Hi,
I'm currently trying to revive some accounting basics for an upcoming internship. Can s/o be good enough and verify/correct the following (very simplified) example of how a deferred tax asses/liability would show up on the three financial statements?
Assuming a deferred tax liability of 10:
income statement EBT: 100 Taxes: 40 --> current: 30 --> deferred: 10 NI: 60
Further you add it back on the cash-flow statement under operating activities and account for it on the balance sheet under {EDIT: liabilities.}
In case of a deferred tax asset it would be the opposite effect on the income statement and {EDIT: be accounted for under assets on the balance sheet.} The income statement entry would look as follows:
income statement EBT: 100 Taxes: 40 --> current: 40 --> deferred: (10) NI: 60
Thanks in advance!
https://www.wallstreetoasis.com/forums/should-i-subtract-increase-in-de…</a">This should help
Not really as it's just a "what is a DTA/DTL" post. Instead of dots or links to general explanations an answer to the question itself would be more helpful.
A large part of working in finance is figuring out new, new to you, or infrequent cases. Learn to fish
Thanks! I was particularly interested in how it is shown on the income statement. Is it just shown as a negative under deferred as I depicted above?
Deferred tax assets and liabilities are created when the tax base of a given thing is different from how it is treated for accounting purposes and creates a discrepancy between the company's reporting for accounting purposes and the taxes paid/owed during a given period.
An increase in an asset is an outflow of cash and an increase in a liability is an inflow of cash, so you will see DTAs/DTLs make an appearance on the CFS and the balance sheet, but not the income statement (feel free to jump in, anyone, if that's off).
You are correct though, that a deferred tax asset reduces future tax liabilities and a deferred tax liability increases them.
Also, what is s/o? Is it "someone?"
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