Asset: An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it's manufacturing equipment or a patent.
Deferred Tax Asset arises when more taxes has been paid in current year and this will result in payment of less taxes in future.
Combining the above two definitions, it may be construed that Deferred Tax Asset is an asset which will result in payment of less taxes in future and thus qualifies for the definition of an asset.
Liability: In general, a liability is an obligation between one party and another not yet completed or paid for. In the world of accounting, a financial liability is also an obligation but is more defined by previous business transactions, events, sales, exchange of assets or services, or anything that would provide economic benefit at a later date.
Deferred Tax Liability: arises when less taxes has been paid in current year and this will result in payment of more taxes in future.
We may conclude from above two definitions that since due to payment of less taxes in current year, an obligation to pay more taxes has arised, Deferred Tax Liability can be considered to be falling under the definition of a liability
Pitresh
commented
4 years ago
Explanation:
Asset: An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it's manufacturing equipment or a patent.
Deferred Tax Asset arises when more taxes has been paid in current year and this will result in payment of less taxes in future.
Combining the above two definitions, it may be construed that Deferred Tax Asset is an asset which will result in payment of less taxes in future and thus qualifies for the definition of an asset.
Liability: In general, a liability is an obligation between one party and another not yet completed or paid for. In the world of accounting, a financial liability is also an obligation but is more defined by previous business transactions, events, sales, exchange of assets or services, or anything that would provide economic benefit at a later date.
Deferred Tax Liability: arises when less taxes has been paid in current year and this will result in payment of more taxes in future.
We may conclude from above two definitions that since due to payment of less taxes in current year, an obligation to pay more taxes has arised, Deferred Tax Liability can be considered to be falling under the definition of a liability