DTA/DTL Technical Question 3 Statements
Ignore title. Prepping the following question and want to make sure I am thinking through it right:
"Tax depreciation is $20 million over 10 years, while financial statement depreciation for the asset is $10 million over 10 years. Walk me through the impact of these differences on the financial statements, assuming a tax rate of 50%"
My sample answer:
DTA is created since cash taxes > book taxes. IS down 10 pre-tax for book depreciation, NI down 5 due to taxes.
CFS has NI down 5, add back 10 in book depreciation since non-cash, subtract 10 in DTA created (not sure here but numbers tie in end), cash down 5.
BS has cash down 5, DTA up 10, PP&E down 10, RE down 5 so both balance to minus 5.
Did I think about this right?
Bump
bump
Dolorum iusto in pariatur laborum blanditiis fugit fugiat. Dolore architecto occaecati reprehenderit consequatur ipsum. Qui eos ducimus qui neque. Quia et in ad in id.
Sed eius eum ea officia provident. Tenetur et soluta delectus. Est illo laboriosam sequi aut. Est neque molestias expedita doloremque aut. Dicta dolor ex id rerum.
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...