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Deferred tax calculation excel3/12/2024 ![]() The term deferred tax, in essence, refers to the tax which shall either be paid or has already been settled due to transient inconsistency between an organisation’s income statement and tax statement.Īs per this definition, there are two types of deferred tax-deferred tax asset and deferred tax liability.Ī deferred tax of any type is recorded in the balance sheet of an organisation however, their point of generation is typically in the income statement. It is this disparity that creates the scope for deferred tax. Hence, sometimes the numbers mentioned in both these reports might vary. In other words, the guidelines behind the preparation of a company’s income statement and tax statement are slightly different. The primary motive behind the creation of two different financial reports is varying guiding principles which govern the recording of companies’ income and their taxation. ![]() To understand deferred tax, it shall be noted at the outset that as per the accounting standards followed by companies, there are two different financial reports which an organisation prepares every fiscal year – an income statement and a tax statement.
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