Deferred Income Tax arises when a company pays their corporate taxes late. when a company doesn't have the cash to...

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Deferred Income Tax arises when a company pays their corporate taxes late. when a company doesnt have the cash to pay their

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Answer 1

Answer #1

Deferred income tax arises when taxable income under IRS rules is lower than taxable income under GAAP

The difference in taxable income under IRS and GAAP occurs due to timing differences.

Some items may not be allowed as deduction for current year under IRS rules however such items have been deducted for computing GAAP income and vica-versa.

These temporary differences are adjusted through deferred taxes.

Option D is correct

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Answer 2

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Deferred Income Tax arises when a company pays their corporate taxes late. when a company doesn't have the cash to...

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