Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 5 terms
The difference between accounting and taxable profit, carried as an asset or liability.
It can swing reported profit with no cash moving. A profit beat from a deferred tax reversal is not an operating improvement.
Tax benefits — usually carried-forward losses — expected to reduce future tax.
Only an asset if future profits arrive to absorb it. Recognising one is management recording a forecast on the balance sheet.
Tax deferred to later years, most often because tax depreciation runs ahead of book depreciation.
Ordinary in capital-intensive businesses. It reverses as the asset ages and book depreciation catches up.
How well reported profit converts into cash and how repeatable it is.
Profit flattered by a tax holiday or a deferred tax reversal is real but not repeatable.
A timing gap between when an item is recognised for accounting and for tax.
The thing deferred tax exists to account for. Permanent differences, by contrast, never reverse.