Computation of Deferred Taxes
Methodology for Computation of Deferred Taxes
- Basic Steps
- Identify types and amounts of differences, Net Operating Loss (NOL) and tax credits.
- Measure total deferred tax liability using correct rate.
- Measure total deferred tax asset and operating loss carryforwards using correct rate.
- Measure deferred tax asset for tax credits.
- Determine realizability of deferred tax asset and set up valuation allowance, if necessary.
- Determine appropriate B/S classification and I/S presentation.