ACC 545 CPA Report
Deferred taxes arise as a result of a temporary difference between income tax expense and income tax payable” (Utep.edu, 2006). If income tax expense is larger than income tax liability the difference is called deferred tax liability. Conversely, if the income tax expense is smaller than current income tax liability the difference is called a deferred tax asset. FASB Statement No. 96 states, “the objective in accounting for income taxes on an accrual basis is to recognize the amount of current and deferred taxes payable or refundable at the date of the financial statements (a) as a result of all events that have been recognized in the financial statements and (b) as measured by the provisions of enacted tax laws” (Summary of Statement NO. 96, n.d.).
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