deferred income tax

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Deferred Income Tax

On a balance sheet, a tax that a company will owe on its income, but that has not yet been assessed. Because of differences between tax regulations and the Generally Accepted Accounting Principles, income may be recognized on a balance sheet for accounting purposes, but not for tax purposes. However, that income will eventually be recognized for tax purposes and income tax will then be assessed. This tax is called deferred income tax, and is recorded as a liability on the balance sheet.

deferred income tax

A liability created by income recognized for accounting purposes but not for tax purposes. The liability recognizes future taxes due when earned income is later reported for tax purposes. Use of accelerated depreciation for reporting to the Internal Revenue Service and straight-line depreciation for reporting to stockholders is one of the major reasons a firm includes deferred income taxes as a liability on its balance sheet.
References in periodicals archive ?
M2 EQUITYBITES-January 24, 2018-Technopolis announces amendment in accounting policy regarding deferred taxes
NORDIC BUSINESS REPORT-January 24, 2018-Technopolis announces amendment in accounting policy regarding deferred taxes
GAAP requires deferred taxes to be reported in two amounts (i.
The issue of accounting for income tax is based on the two international existing approaches, an approach that should recognize only income taxes currently payable, deferred taxes are not recognized (method of payable tax) and an approach that in addition to current tax must recognize even deferred taxes.
Seventeen of the identified firms restated their financial statements due to two problems: (1) improper recording of deferred taxes related to indefinite-lived intangibles acquired in mergers and acquisitions and (2) mishandling of deferred tax assets and liabilities on indefinite-lived intangibles in determining the valuation allowance.
Carried out in a Romanian company activating in the civil engineering and infrastructure domain, the conducted research revealed the advantage of using deferred taxes in presenting a true image of the company's financial statements with impact on the company's result.
Deferred taxes have long been one of the most perplexing issues for chief executive officers to understand.
Another common issue that often goes overlooked in accounting for income taxes under FAS 109 is the recognition of deferred taxes on indefinite-lived assets.
Quickly calculate deferred taxes by legal entity -- The majority of temporary differences impacting the calculation of current and non-current deferred tax assets and liabilities are automatically sourced from within the solution.
The association between deferred taxes and common stock risk.
Exhibit 1, page 73, illustrates the accounting for NQSOs and deferred taxes.
The IASB and FASB have established different accounting standards for deferred taxes on intercompany profits in inventory.