The Recognition and Timing of Deferred Tax Liabilities

2004 ◽  
Vol 31 (7‐8) ◽  
pp. 985-1014 ◽  
Author(s):  
A. Gaeremynck ◽  
L. Van De Gucht
Keyword(s):  
Deferred Tax Liabilities ◽  
Deferred Tax

The Valuation Relevance of Reversing Deferred Tax Liabilities

2004 ◽  
Vol 79 (2) ◽  
pp. 437-451 ◽  
Author(s):  
David A. Guenther ◽  
Richard C. Sansing
Keyword(s):  
Discount Rate ◽  
Firm Value ◽  
Market Value ◽  
Present Value ◽  
Depreciation Rate ◽  
The Future ◽  
Deferred Tax Liabilities ◽  
Deferred Tax ◽  
Tax Depreciation ◽  
Depreciation Methods

This paper compares two attributes of a deferred tax liability (DTL) that arise from differences in book and tax depreciation methods. The first attribute is the effect of the DTL on the market value of the firm. The second is the length of time between when the asset is placed into service and when the DTL associated with that asset begins to reverse. The paper shows that a decrease in the time it takes for the DTL to begin to reverse is neither necessary nor sufficient for the value of the DTL to increase. It also shows that the value of the DTL is not equal to the present value of the future deferred tax expense. The effect of one dollar of DTL on firm value depends only on the tax depreciation rate and the discount rate.

COVID-19 and deferred tax reversals

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jilnaught Wong ◽  
Norman Wong ◽  
Willow Yangliu Li
Keyword(s):  
New Zealand ◽  
Financial Statement ◽  
Public And Private ◽  
Content Type ◽  
Reversal Effect ◽  
Tax Relief ◽  
Deferred Tax Liabilities ◽  
Deferred Tax ◽  
Accounting Reports ◽  
Tax Depreciation

Purpose This paper aims to examine the financial statement impact resulting from the tax depreciation on buildings that was reinstated on 25 March 2020 as part of the New Zealand Government’s coronavirus (COVID-19) tax support package. The COVID-19 pandemic and the tax relief created an accounting response to map the environment to accounting reports, reversing previously recognized deferred tax liabilities and increasing reported income as a result. Design/methodology/approach This is an exploratory and descriptive study to understand the accounting response and impact on companies’ financial statements following a COVID-19 tax relief to support businesses in a dire financial situation as the effects of COVID-19 took hold. Findings First, the accounting response provided the appropriate mapping from the COVID-19 environment to accounting reports. Second, the financial statement impacts are material, especially for companies with extensive holdings of buildings that are held for use. Third, while the accounting relief was immediate, the economic (cash flow) support does not occur until a year later. Research limitations/implications The financial statement impacts are based on a subset of NZX 50 companies with the available information at the time of writing. However, they do not compromise the external validity of the findings because the tax depreciation relief applies to other listed companies, unlisted public and private companies, trust, partnerships and individuals. Practical implications The New Zealand Government could have been more helpful to businesses by allowing an immediate depreciation deduction in the 2020 year as opposed to implementing it from 2021. Further, it could have legislated a backlog depreciation deduction from 2010 – when the depreciation on buildings was disallowed – to 2020. Originality/value This paper documents the evolution of the accounting for deferred taxes when the New Zealand Government withdrew the tax depreciation in 2010, how NZ IAS 12 evolved as a result of that event and now the reversal effect with the reinstatement of the tax depreciation during COVID-19. The paper also blends in the accounting responses and considers whether they are opportunistic or efficient.

DISCOUNTING OF DEFERRED TAX LIABILITIES

1990 ◽  
Vol 17 (5) ◽  
pp. 757-758 ◽  
Author(s):  
Brett Collins ◽  
John Rickard ◽  
Michael Selby
Keyword(s):  
Deferred Tax Liabilities ◽  
Deferred Tax

Discounting Deferred Tax Liabilities: Some Clarifying Comments

1975 ◽  
Vol 2 (1) ◽  
pp. 121-133 ◽  
Author(s):  
EDWARD E. WILLIAMS ◽  
M. CHAPMAN FINDLAY III
Keyword(s):  
Deferred Tax Liabilities ◽  
Deferred Tax

scholarly journals DEFERRED INCOME TAX: IMPACT ON FINANCIAL AND TAX REPORTING (THE PRACTIСE OF UKRAINE AND GERMANY)

2021 ◽  
Vol 4 (39) ◽  
pp. 138-148
Author(s):  
O. Malyshkin ◽  
S. Rohoznyi ◽  
O. Yarmolitska ◽  
Yu. Ostapenko
Keyword(s):  
Financial Reporting ◽  
Income Tax ◽  
Jel Classification ◽  
International Standards ◽  
Tax Base ◽  
Deferred Tax Assets ◽  
Deferred Tax Liabilities ◽  
Deferred Tax ◽  
Tax Reporting ◽  
The Impact

Abstract. Income taxation is typical for most countries with their own peculiarities. In the practice of the Ukrainian enterprises, there is a lack of relationship between accounting and tax accounting to reflect the deferred tax asset and deferred tax liability in the reporting. The purpose of the article is to analyze the income tax in terms of its calculation by the international standards and identify key tax differences. The authors proposed to formulate the definitions of the current income tax which should be understood as the amount of income taxes payable (reimbursed) on taxable profit (tax loss) for the period and expenses (income) from income tax which should be understood as the total amount included in the determination of profit or loss for the period in accordance with current and deferred taxes. This interpretation of the definitions will help better understand the concepts in accounting and taxation. The tax base of assets and the tax base of liabilities are given and substantiated. The temporary differences were identified by authors. The example of definition of Deferred tax liabilities and Deferred tax assets, the order of their reflection in the report on financial results (about the total income) and disclosure in the Notes to the financial reporting is considered and analyzed. The impact on the indicators of the Income Tax Return is investigated. There is no direct impact of the amount of the Deferred tax assets / Deferred tax liabilities according to the current algorithm for the object of taxation, which is determined by tax legislation. The conclusions are made about the importance of determining of Deferred tax liabilities and Deferred tax assets, which directly affects the amount of net profit. The result of the study was confirmation of the hypothesis concerning different orientation of norms of the legal documents on the display of information in the forms of the financial and tax reporting. Such differences are related to the different requirement to the reporting by the modern stakeholders. Keywords: income tax, deferred tax, tax asset, tax liability, reporting. JEL Classification M40, М41, М48 Formulas: 0; fig.: 2; tabl.: 5; bibl.: 16.

Audit Firms, Deferred Taxation and Financial Reporting

2016 ◽  
Vol 3 (1) ◽  
pp. 1-21 ◽  
Author(s):  
Evangelos Chytis ◽  
John Filos ◽  
Periklis Tagkas ◽  
Maria Rodosthenous
Keyword(s):  
Financial Reporting ◽  
Banking Sector ◽  
Stock Exchange ◽  
Balance Sheets ◽  
Deferred Tax Assets ◽  
Audit Firms ◽  
Athens Stock Exchange ◽  
Deferred Tax Liabilities ◽  
Deferred Tax ◽  
Audit Reports

The purpose of this paper is the sectoral analysis and evaluation of the external audit reports in relation to the amounts of deferred taxes on the balance sheets of listed companies in the Athens Stock Exchange (ASE). External auditors participate significantly in the preparation of financial reporting, reducing agency problems and aiding acceptance of such information by the users as reliable. The “unqualified” audit reports correspond to more than two thirds of the total, while in the banking sector there is no “unqualified” (ie without even issue of ‘emphasis') Audit Report after 2011. More than two thirds of Deferred Tax Assets - including those from Loss Carryforwards - (DTA), Deferred Tax Liabilities (DTL), and Deferred Tax in the Income Statement appear on the Balance Sheets of the companies audited by the Big 5. Audit firms and supervisory authorities do not seem to have made satisfactory evaluation and exploitation of this information.

scholarly journals THE EFFECT OF TAX PLANNING AND DEFERRED TAX LIABILITIES ON EARNS MANAGEMENT

2019 ◽  
Vol 2 (2) ◽  
pp. 124
Author(s):  
Zulfa Rosharlianti ◽  
Rahmat Hidayat
Keyword(s):  
Regression Analysis ◽  
Secondary Data ◽  
Tax Planning ◽  
Annual Reports ◽  
Manufacturing Companies ◽  
Negative Effect ◽  
Deferred Tax Liabilities ◽  
Deferred Tax ◽  
Positive Effect ◽  
Observation Period

This researched are intended to analyze the effect of planning tax and deferred tax liabilities on earn management. Manufacturing companies listing on the IDX from 2013 to 2017 are the object of research. This research uses secondary data on annual reports obtained through the sites www.idx.co.id. Purposive sampling is the method used in sampling, with population of 132 entity and the sample in this research are 10 entities the observation period of 5 years, with the result that obtained 50 samples. The method data analysis of this research used multiple regression analysis with the SPSS version 24.The results shows that the tax planning has a negative effect on earn management, neither the deferred tax liabilities does not have effect on earn management. Simultaneously the tax planning and deferred tax liabilities have a positive effect on earn management.

Valuation of the Firm in the Presence of Temporary Book-Tax Differences: The Role of Deferred Tax Assets and Liabilities

2000 ◽  
Vol 75 (1) ◽  
pp. 1-12 ◽  
Author(s):  
David A. Guenther ◽  
Richard C. Sansing
Keyword(s):  
Financial Reporting ◽  
Market Value ◽  
Cash Flows ◽  
Present Value ◽  
Deferred Tax Assets ◽  
Tax Deductions ◽  
Deferred Tax Liabilities ◽  
Deferred Tax ◽  
Future Cash Flows

This study uses an analytical model to investigate the value of the firm when there are temporary differences between when revenue and expense items are recognized for tax- and financial-reporting purposes. The model shows that deferred tax assets and liabilities transform book values of underlying liabilities and assets into estimates of the after-tax cash flows on which the firm's market value is based. The analysis shows that if tax deductions are taken on a cash basis, and if the underlying assets and liabilities are recorded at the present value of their associated future cash flows, then the value of deferred tax assets and deferred tax liabilities is their recorded amount, regardless of when the asset will be realized or when the liability will reverse. If tax deductions are not taken when the expenditure is made (e.g., depreciation) or if underlying assets and liabilities are recorded at more than the present value of their associated future cash flows (e.g., warranty liabilities), then the market value of deferred tax assets and deferred tax liabilities is less than their recorded values. The value of the deferred tax account is independent of when that account will reverse.

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