Answered: Some accountants believe that deferred…

Some accountants believe that deferred taxes should not be recognized for certain temporary differences. What is the conceptual basis for this argument?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 12Q

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Question

Some accountants believe that deferred taxes should not be recognized for certain temporary differences. What is the conceptual basis for this argument?

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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