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Sagot :
Tax expense for the period, comprising current tax and deferred tax, should be included in the determination of the net profit or loss for the period. Taxes on income are considered to be an expense incurred by the enterprise in earning income and are accrued in the same period as the revenue and expenses to which they relate. Such matching may result into timing differences. The tax effects of timing differences are included in the tax expense in the statement of profit and loss and as deferred tax assets
Net deferred tax liabilities :
The deferred tax liability on a company balance sheet represents a future tax payment that the company is obligated to pay in the future
It is calculated as the company's anticipated tax rate times the difference between its taxable income and accounting earnings before taxes.
Deferred tax liability is the amount of taxes a company has "underpaid" which will be made up in the future. This doesn't mean that the company hasn't fulfilled its tax obligations. Rather it recognizes a payment that is not yet due.
For example, a company that earned net income for the year knows it will have to pay corporate income taxes. Because the tax liability applies to the current year, it must reflect an expense for the same period.
But the tax will not actually be paid until the next calendar year. In order to rectify the accrual/cash timing difference, tax is recorded as a deferred tax liability.
Learn more about Tax liabilities :
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