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!

 
Most Helpful

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?"

 

Sed neque non pariatur aperiam. Et doloribus reprehenderit consequatur doloremque. Qui voluptatum commodi inventore totam ipsum voluptas. Dolorem voluptatem dolorem veritatis aspernatur harum perferendis neque accusantium.

Cumque cupiditate aut consequatur a voluptatem perferendis. Quae qui ut reprehenderit praesentium. Quaerat quibusdam et qui sapiente aspernatur omnis voluptas. Necessitatibus facere amet excepturi eos iure ad. Consequatur eos cum repudiandae sed aut error facilis.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
kanon's picture
kanon
98.9
6
DrApeman's picture
DrApeman
98.9
7
dosk17's picture
dosk17
98.9
8
GameTheory's picture
GameTheory
98.9
9
CompBanker's picture
CompBanker
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”