Likewise, the company will record a current benefit without the corresponding deferred tax expense
from credit utilization.
Thus we consider that the company's result will reflect the expense with the current income tax as well as the deferred tax expense
, which will result in the provision of financial statements as close as possible to reality.
times 35%) and an increase to deferred tax expense
of $7 million.
The aggregate amount of current and deferred tax expense
for each income statement presented;
The Separate Return Method is the Preferred Method Paragraph 40 of FAS 109 requires that the current and deferred tax expense
for a group that files a consolidated return be allocated among the group members when those members issue separate financial statements.
Deferred tax expense
is an income statement term used to refer to the difference between the deferred tax assets and liabilities between the beginning and end of an accounting period when the deferred liabilities are greater than the deferred assets, or when there is a net decrease in deferred tax assets.
Unlike FAS 109, changes in deferred tax assets or liabilities will not be reported in the income statement as a deferred tax expense
Profitable companies without a valuation allowance will record a timing difference in which current tax expense and taxes payable are reduced and deferred tax expense
increased, with a corresponding DTA reduction.
b) Deferred tax expense
(897) (1 736) 1 029 (3 994)
FAS 109 requires public companies to disclose the total of all deferred tax liabilities, assets, valuation allowance, current tax expense or benefit, deferred tax expense
or benefit, investment tax credits, governmental grants, the benefits of operating loss carryforwards, the tax expense related to goodwill or other noncurrent intangible assets of an acquired entity, adjustments to a deferred tax liability or asset for enacted changes in tax laws or rates or change in the tax status of the enterprise, and the rate reconciliation and the amounts and expiration dates of operating loss and tax credit carryforwards for tax purposes.
Management would compute a net deferred tax asset or liability based on currently enacted tax rates at the balance sheet date and an adjusting entry would adjust the beginning balance of the deferred tax account to the required balance with the income statement account used as a "plug" item - as a deferred tax expense
or benefit to make the entry balance.
Examples of low-quality earnings include changes to more liberal accounting estimates, a non-recurring item contributing significantly to results, an unusually large increase in deferred tax expense
, or earnings that are cyclical (such as the earnings of commodity companies) or subject to wide variations due to uncontrollable forces such as weather.