A deferred tax liability (or asset) is described as the tax effect of the temporary difference...

Question

A deferred tax liability (or asset) is described as the tax effect of the temporary difference between the financial statement carrying amount of an asset
 or liability and its tax basis. Explain this tax effect of the temporary difference. How might it produce a deferred tax liability? A deferred tax asset?

David · Accepted Answer

A deferred tax liability (or asset) is described as the tax effect of the temporary 
difference between the financial statement carrying amount of an asset or liability 
and its tax basis. Explain this tax effect of the temporary difference. How might it 
produce a deferred tax liability? A deferred tax asset 
The literal meaning of "Deferral" means postponed. Thus, deferred tax liability arises 
when the company postpones its tax liability from the present period to a future period. 
Deferred tax liabilities and deferred tax asset arise due to taxable differences.

A deferred tax liability (or asset) is described as the tax effect of the temporary difference between the financial statement carrying amount of an asset or liability and its tax basis. Explain this...

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