What does the balance sheet of a deferred tax asset event look like? e.g. 40k revenue every year, 60k asset, depreciated 3yr SL for tax but 3yr SYD for financial, what will the balance sheet look like? What’s wrong with this analysis? Income Statement (Tax Reporting) Year | 1 | 2 | 3 Revenue | 40 | 40 | 40 Depreciation | (20) | (20) | (20) Taxable income| 20 | 20 | 20 Taxes payable | (8) | (8) | (8) Net income | 12 | 12 | 12 Income Statement (Financial Reporting) Year | 1 | 2 | 3 Revenue | 40 | 40 | 40 Depreciation | (30) | (20) | (10) Taxable income| 10 | 20 | 30 Taxes expense | (4) | (8) | (12) Net income | 6 | 12 | 18 Balance Sheet Year | 1 | 2 | 3 Year | 1 | 2 | 3 Taxes payable | 8 | 16 | 24 DTA | 4 | 4 | 0 RE | (4) | (12) | (24) RE = retained earnings
Or do I just net the tax payable to make it look like this? Balance Sheet Year | 1 | 2 | 3 Net Taxes payable | 4 | 4 | 0 DTA | 4 | 4 | 0