Effects of Deferred Tax Asset on Financial Statements
I know the typical accounting question for interviews is about depreciation, but I was wondering how Deferred Tax assets would affect the 3 statements just in case. If there’s a $10 increase in deferred tax assets and assuming a 40% tax rate, how would the 3 financial statements be affected?
Would the income statement not be impacted, while the net change in cash in the CF statement drop $10 and ultimately the asset in the balance sheet go down $10 from the change in cash and go back up $10 since DTA is an asset causing them to cancel out?
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