Balance Sheet Flashcards
what are deferred tax assets?
how do DTA arise?
finaincial assets on a company’s balance sheet that arise when a company paid more taxes than necessary.
the amount can be used to reduce taxable income in future periods
DTA appear in the event of:
net operating loss carried forward
temporary differences between tax reporting and financial reporting (in case of DTL, this would be higher depretiation in tax reporting and lower in FS)
list non current assets
intangibles
PPE
Lease assets
Investment property
equity investments
list current assets
inventories
trade receivables
financial services receivables
tax receivables
prepaid expenses (sometimes under “other current assets”)
marketable securities
cash and equivalents
accrued (ratei) and deferred (risconti)
Accrued: transactions that have occured (revenue/expense), but cash has not been exchanged yet
Ratei: entrate/spese già maturate ma non ancora incassate/pagate
attivi: accounts receivable
passivi: accounts payable/accrued expenses (use electricity in december but receive the bill in february)
Deferred: cash has been exchanged, but economic event has not happened yet
Risconti: spese/entrate già pagate/incassate, ma che maturano nei periodi successivi
Attivi: prepaid expenses (insurance)
Passivi: unearned revenue
what are liabilities?
what the company owes, obligations arising from past events, settlements expected to result in a future outflow of economic benefits
Più formalmente, le passività rappresentano obblighi di un’azienda derivanti da eventi passati, la cui estinzione si prevede comporti un’uscita futura di benefici economici dall’entità.
what are current assets?
assets expected to be converted into cash, used, or sold whithin the current operating cycle
receivables
supplies
cash and equivalents
prepaid expenses
inventories
current liabilities
to be settled in the current operating cycle
working capital?
the excess of current assets over current liabilities
CA:
cash
AR
Inventories
Prepaid expenses
Other CA
CL:
AP
Accrued Liabilities
Accrued income taxes
ST debt
Current portion of LT debt
what are intangible assets?
non monetary assets without physical substance
benefits of DTA
reduction in future taxable income, when the company may need cash the most
managing smoothing of earnings
benefits of DTL
pay taxes later, keep cash now
what are the components of equity?
capital contributed by owners (common stock/issued capital)
preferred shares
treasury shares
retained earnings
minority interests, consolidated but not wholly owned by the parent company
treasury shares
(stock repurchased, contra-equity account). Stock buybacks increase shareholder value:
with fewer outstanding stocks, EPS >, making stocj more attractive
a way of redistributing value to shareholders
confidence signal by management
