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aimtobeacpa
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Joined: 10 Dec 2009
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Posts: 657

Posted: 06 Jul 2010 at 02:10 \| IP Logged

Tax return	Accounting records
Uncollectible accounts expense	$220,000	$250,000
Depreciation expense	860,000	570,000

The uncollectible accounts expense gives rise to a future deductible difference of $30,000 ($250,000 - $220,000) causing the firm's deferred tax asset to increase $12,000 ($30,000 x .40). The future enacted tax rate is used to measure changes in deferred tax accounts. The depreciation difference gives rise to a future taxable difference of $290,000 ($860,000 - $570,000) causing the firm's deferred tax liability to increase $116,000 ($290,000 x .40). The net deferral is $104,000 ($116,000 - $12,000)

i am getting confused in above when to consider as deferred tax asset and when deferred tax liability?

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nipson
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Joined: 01 Jun 2010
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Posts: 63

Posted: 06 Jul 2010 at 03:35 \| IP Logged

Not sure what your question is but....
A future deductible difference will decrease future taxes. A reduction in taxes is a benefit. An item that provides a future benefit to a firm is an asset. The benefit will not be realized immediately, so it is deferred. Therefore; the future deduction is a deferred asset.

aimtobeacpa
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Joined: 10 Dec 2009
Online Status: Offline
Posts: 657

Posted: 06 Jul 2010 at 11:16 \| IP Logged

thanks...

__________________
BEC-74,82(lost credit),78
FAR-67,80
AUD-75
REG-68,72,79

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