I’m having some issues understanding how to calculate and determine when there’s a deferred tax asset and when its a deferred tax liability. Anyone have any tips or thoughts on how to better understand it? Maybe a link if anyone has one? It seems each full test has like 5 or so questions (definetely feels like more) and I would prefer to figure it out instead of my current strategy of guessing. Thanks!
You’ll find it useful
Asset - paid more than ‘required’, so won’t have to pay as much later. (Like a Prepaid tax)
Liability – paid less than ‘required’, so will have to pay that. (Like a accounts payable)
Income Statement Tax - Tax Documents Tax = Difference (Positive, liability – negative, asset)
^I"m writing the above at 3 a.m. Be sure to fact check I didn’t reverse them because I’m tired lol