In this lesson, Nick Palazzolo, CPA, clarifies the concepts of deferred tax assets and deferred tax liabilities and their significance for the future tax implications of a company. Nick first unpacks the main reasons these deferred tax positions occur—stemming from differences between taxable income and financial statement income—and he provides a practical formula for identifying when a company has either a deferred tax asset or liability. This lesson also includes his personalized methods for remembering these key concepts, which are particularly helpful when tackling exam questions. Moreover, Nick expertly navigates you through the valuation allowance for doubtful deferred tax assets, presenting the related journal entry, and explaining how to prudently impair these assets to reflect their expected realizable value, ensuring that you're well-prepared to recognize and account for these items accurately.
Lesson: Deferred Tax Assets and Liabilities
In this lesson, Nick Palazzolo, CPA, clarifies the concepts of deferred tax assets and deferred tax liabilities and their significance for the future tax implications of a company. Nick first unpacks the main reasons these deferred tax positions occur—stemming from differences between taxable income and financial statement income—and he provides a practical formula for identifying when a company has either a deferred tax asset or liability. This lesson also includes his personalized methods for remembering these key concepts, which are particularly helpful when tackling exam questions. Moreover, Nick expertly navigates you through the valuation allowance for doubtful deferred tax assets, presenting the related journal entry, and explaining how to prudently impair these assets to reflect their expected realizable value, ensuring that you're well-prepared to recognize and account for these items accurately.
Updated: Oct. 20, 2021 Create an account