Taxation

Question 1

What is deferred tax asset?

Answer 1

Deferred tax asset is an accounting term that refers to a situation where a business has overpaid taxes or taxes paid in advance on its balance sheet. These taxes are eventually returned to the business in the form of tax relief, and the over-payment is, therefore, an asset for the company.

Question 2

What is a deferred tax liability?

Answer 2

DTL is reported on a firm’s balance sheet and represents the net difference between the taxes that are paid in the current accounting period and the taxes that will be paid in the next accounting period. The liability occurs when the accounting income is greater than the taxable income.

Question 3

What is a dividend received deduction?

Answer 3

the DRD allows a company that receives a dividend from another company to deduct that dividend from its income and reduce its income tax accordingly.