Deferred Tax Asset

A deferred tax asset is an amount of income tax that a company has already paid but can't claim yet. This is because the company has not yet realized the corresponding revenue. For example, a company might have incurred expenses that will be deductible in the future, or it might have made a capital investment that will generate taxable income in the future.

Deferred tax assets are created when a company's taxable income is less than its accounting income. This can happen for a number of reasons, such as:

• The company uses accelerated depreciation for tax purposes, but straight-line depreciation for financial reporting purposes.
• The company has a net operating loss carryforward.
• The company has a deferred compensation plan.

Deferred tax assets are reported on the balance sheet as a non-current asset. They are amortized over time, as the company realizes the corresponding revenue.

Deferred tax assets can be a valuable asset for a company, because they can reduce its tax liability in the future. However, they can also be a liability, if the company's taxable income increases in the future.

Here are some additional details about deferred tax assets:

• They are created when a company's taxable income is less than its accounting income.
• They are reported on the balance sheet as a non-current asset.
• They are amortized over time, as the company realizes the corresponding revenue.
• They can be a valuable asset for a company, because they can reduce its tax liability in the future.
• They can also be a liability, if the company's taxable income increases in the future.