Thursday, February 5, 2015

What Are Deferred Tax Assets?

Deferred-tax assets are created when a company's recorded income tax (what it reports in its income statement) is lower than that paid to the tax authority. It's usually a good thing to find on a balance sheet, because the company could receive a future tax benefit from it. In other words, if you're looking at two otherwise identical companies, the one with the deferred-tax asset is more attractive, because it could pay relatively less tax in future. Let's look in more detail and use a simple example to explain the concept.


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