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What is Differed tax Liability?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 rohith asked almost 3 years ago

Hi I am the CA student. I am having doubt about taxation. Can I know, What is Differed tax Liability?

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6 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

Hi, DEFINITION of 'Deferred Tax Liability' An account on a company's balance sheet that is a result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year. --A deferred tax liability arises when a company's real-world tax bill is lower than what its financial statements suggest it should be due to differences between tax accounting rules and standard accounting practices. The liability signals to observers that the company remains under a tax obligation --SAVE NOW PAY LATER is the concept of differed tax liability

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered almost 3 years ago

--DEFINITION of 'Deferred Tax Liability' An account on a company's balance sheet that is a result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year. --A deferred tax liability arises when a company's real-world tax bill is lower than what its financial statements suggest it should be due to differences between tax accounting rules and standard accounting practices. The liability signals to observers that the company remains under a tax obligation

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Chirag answered almost 3 years ago

Differed Tax Liability --A tax liability that a company owes and does not pay at that current point, although it will be responsible for paying it at some point in the future. This is often caused by a difference in a company's balance sheet, due to the differences between accounting practices and tax regulations. Occasionally, a company will have a difference in their taxable income and income before tax due to these differences, resulting in a deferred tax liability. --DEFINITION of 'Deferred Tax Liability' An account on a company's balance sheet that is a result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year. --A deferred tax liability arises when a company's real-world tax bill is lower than what its financial statements suggest it should be due to differences between tax accounting rules and standard accounting practices. The liability signals to observers that the company remains under a tax obligation --SAVE NOW PAY LATER is the concept of differed tax liability

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered almost 3 years ago

> Differed Tax Liability --A tax liability that a company owes and does not pay at that current point, although it will be responsible for paying it at some point in the future. This is often caused by a difference in a company's balance sheet, due to the differences between accounting practices and tax regulations. Occasionally, a company will have a difference in their taxable income and income before tax due to these differences, resulting in a deferred tax liability. --DEFINITION of 'Deferred Tax Liability' An account on a company's balance sheet that is a result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year. --A deferred tax liability arises when a company's real-world tax bill is lower than what its financial statements suggest it should be due to differences between tax accounting rules and standard accounting practices. The liability signals to observers that the company remains under a tax obligation --SAVE NOW PAY LATER is the concept of differed tax liability **Depreciation Example** The most common source of deferred tax liabilities is depreciation, the process by which companies allocate the cost of assets. Say that your company spends $6,000 on a machine that will last three years and that it pays a 30 percent tax on profits. Under regular financial accounting, you depreciate the machine by $2,000 per year for the next three years. Each year, your company's financial statements (but not necessarily its tax returns) show a reduction in net income of $2,000 and a $600 reduction in taxes. Now say tax accounting allows your company to front load the depreciation so the company depreciates $3,000 in the first year, $2,000 in the second and $1,000 in the third. In the first year, the company claims $3,000 in depreciation expense on its tax return, reducing its taxes by $900. It creates a $300 deferred tax liability on its balance sheet to represent the difference between what it "should" have paid based on its financial statements and what it actually paid. In the third year, the situation reverses itself. The company pays $300 more in taxes than what the financial statements show it "should." The company handles the difference by eliminating the liability from the balance sheet.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 jitendra etikala answered almost 3 years ago

A tax liability that a company owes and does not pay at that current point, although it will be responsible for paying it at some point in the future. This is often caused by a difference in a company's balance sheet, due to the differences between accounting practices and tax regulations. Occasionally, a company will have a difference in their taxable income and income before tax due to these differences, resulting in a deferred tax liability.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered almost 3 years ago

An account on a company's balance sheet that is a result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year.

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