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Can anyone recommend any good sources for explaining deferred tax in financial reporting? I really am struggling to understand it. I’d be grateful for any help at all!
It’s the potential tax liability which will arise upon the occurrance of some uncertain future event. So, for example, where a company revalues an asset, tax will be payable on the sale of that asset (including the revaluation gain). Now, the revaluation gain may not actually occur, but deferred tax is accounted for and provided for as representing the amount of extra tax which would be payable in the event that that revaluation gain did actually occur
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