Enjoyed the video? Then please subscribe to the channel, and watch the related video on deferred taxes next which has some real life examples of deferred tax assets and liabilities, as well as some more explanation of the journal entries: ruclips.net/video/7QKvzNV1Qw8/видео.html
The best explanation and examples that i have seen for deferred taxes. Thank you so much sir and also continue posting the complex topics in accounting as these kind of topics are not even taught properly in schools or colleges.They usually just runover these kind of topics which is actually the important ones in real life working expirence.
Thank you very much for the kind words, Ananth! Completely agree with you: deferred tax assets and deferred tax liabilities can have a huge impact on the financial position of a company. If I can suggest a few other topics in that category: retained earnings, goodwill, noncontrolling interest. All of these are discussed in my "Intermediate Accounting" playlist: ruclips.net/video/xiwQh5E7JWQ/видео.html&pp=gAQBiAQB Please spread the word about the channel to friends and colleagues!
so thorough, thank you!!! Honestly make me question university education (not all universities), textbook ain't always the best teacher, even when it's written by the best, and neither are some high-paid professors
lol im glad that i know english and i can search for videos likes this,i couldnt understand this concept in my spanish videos and this was extremely useful,im from Chile so we use IFRS but the concept its the same i guess
Thank you for the suggestion. I am not sure whether I have much to say about industry analysis. I do have a video for you on direct comparison between two companies (Google vs Amazon) ruclips.net/video/PI9X5Ybek_E/видео.html and a more generic video on financial analysis ruclips.net/video/jG-oXx54qxE/видео.html
Glad it was helpful, Zhao! Take a look at the related videos on deferred tax assets ruclips.net/video/MvXAljQD4II/видео.html and deferred taxes ruclips.net/video/7QKvzNV1Qw8/видео.html as well.
Thank you very much, Vikash! I think the video on deferred tax assets (the "counterpart" to deferred tax liabilities) might be useful as well: ruclips.net/video/MvXAljQD4II/видео.html In terms of the relationship between balance sheet and P&L, I would recommend this video: ruclips.net/video/wZdaVEX41WQ/видео.html In depth review of the balance sheet: ruclips.net/video/eIjCaeNm-Vk/видео.html In depth review of the income statement: ruclips.net/video/Hq-44PHgAiU/видео.html
How long can taxes be deferred for? And is it just for depreciation, or can it be used for other expenses? Edit: A bit off-topic, but when a corporation issues stock above its book value, does the difference count as profit?
Regardless of what price the stock is issued for, the journal entry is Dr Cash $x Cr Shareholder's Equity $x It goes straight to the balance sheet and has no impact on the P/L accounts, so it can't be profit.
From reading through many annual reports of various large corporations, I have found that deferred tax liabilities are mostly related to depreciation of property, plant and equipment. To a lesser extent, acquisitions related intangible assets are mentioned as another driver of deferred tax liabilities. There is no "fixed rule" on how long taxes can be deferred for. It depends on how similar or different the treatments (of for example depreciation) are for tax purposes vs book purposes. See also my video on deferred tax: ruclips.net/video/7QKvzNV1Qw8/видео.html On the question of issuing stock above book value, the more detailed answer is that this difference gets recorded as a credit to paid-in capital. See also my video on treasury stock: ruclips.net/video/knGKpN9sYiw/видео.html
GAAP P&L is the profit and loss statement per the accounting rules for reporting to the stock market (IFRS, US GAAP, etc.), while TAX P&L is the profit and loss statement prepared according to the tax accounting rules of the country.
That depends on whether the tax amortization versus GAAP amortization rules are different in the country that the investment is in. If so, then you would have a deferred tax liability as well.
Correct. If the rules and/or principles you apply for preparing different sets of books are different, then you get different outcomes in the P&L. That's why at a large multinational company I used to work at, one of our internal controls was to have a stat-to-GAAP reconciliation (listing and tying out all line items that were different between statutory submission and US GAAP submission).
@@TheFinanceStoryteller awesome , thank you again for answering all the questions on ur videos , u are one of the few ppl that do that ,, really appreciate the time and effort educating us.
@@sirl1364 Please spread the word to friends and colleagues!!! I love the interaction with the viewers of my videos, let's build our knowledge and understanding together.
Depends on the structure of the deal (are you selling the assets or the equity), the fiscal status of the company (what type of legal entity, if any), and your local country tax rules. There's no general answer to that question.
If the buyer if the company is buying Deferred Tax liabilities then he will be paying these Taxes in future years to IRS/ Tax Authorities. If the buyer is not buying the Deferred Tax liabilities then you will give credit to the buyer against this liability
@@SA1984KAUSH Thanks for the responses - I guess that’s very American of me to assume that we were talking about the USA. In the USA, when buying a real estate asset (or the ownership entity of an asset) must one account for the seller’s depreciation schedule or not? Alternatively phrased, must one account for the effects of accelerated depreciation on the eventual buyer when planning a sale in the coming few years?
Enjoyed the video? Then please subscribe to the channel, and watch the related video on deferred taxes next which has some real life examples of deferred tax assets and liabilities, as well as some more explanation of the journal entries: ruclips.net/video/7QKvzNV1Qw8/видео.html
I'm an accounting student, and the book lessons made this concept so complicated. Thanks to you, I understand DTLs so much better.
Wonderful to hear that! Please spread the word to fellow students.
Really great explanation. I am not an accountant but I love it when people explain these things using debits, credits and ledger accounts.
Glad you enjoyed it! I try to make my videos as widely accessible as possible. 🙂
The best explanation and examples that i have seen for deferred taxes.
Thank you so much sir and also continue posting the complex topics in accounting as these kind of topics are not even taught properly in schools or colleges.They usually just runover these kind of topics which is actually the important ones in real life working expirence.
Thank you very much for the kind words, Ananth! Completely agree with you: deferred tax assets and deferred tax liabilities can have a huge impact on the financial position of a company. If I can suggest a few other topics in that category: retained earnings, goodwill, noncontrolling interest. All of these are discussed in my "Intermediate Accounting" playlist: ruclips.net/video/xiwQh5E7JWQ/видео.html&pp=gAQBiAQB
Please spread the word about the channel to friends and colleagues!
so thorough, thank you!!! Honestly make me question university education (not all universities), textbook ain't always the best teacher, even when it's written by the best, and neither are some high-paid professors
Happy to help. :-) Well done, Jane, for looking for additional examples and explanations beyond the textbook!!!
Dankjewel, super handig
Graag gedaan! Heb je de bijbehorende video over "deferred tax assets" ook al bekeken? ruclips.net/video/MvXAljQD4II/видео.html&pp=gAQBiAQB
Thank you very much for explaining such a complex topic so easily 🎉🎉🎉
Happy to help!!! Have a look at the counterpart video on deferred tax assets as well: ruclips.net/video/MvXAljQD4II/видео.html
lol im glad that i know english and i can search for videos likes this,i couldnt understand this concept in my spanish videos and this was extremely useful,im from Chile so we use IFRS but the concept its the same i guess
Greetings back from the Netherlands!!! Yes, the basic idea of deferred taxes should be the same between US GAAP and IFRS.
Really helpful videos !!
Thanks alot
Videos on how to do industry analysis will help further !
Thank you for the suggestion. I am not sure whether I have much to say about industry analysis. I do have a video for you on direct comparison between two companies (Google vs Amazon) ruclips.net/video/PI9X5Ybek_E/видео.html and a more generic video on financial analysis ruclips.net/video/jG-oXx54qxE/видео.html
Thank you for this
Happy to help! Did you see the related video on deferred tax assets as well: ruclips.net/video/MvXAljQD4II/видео.html&pp=gAQBiAQB
very clearly explained. Thanks
Glad it was helpful, Zhao! Take a look at the related videos on deferred tax assets ruclips.net/video/MvXAljQD4II/видео.html and deferred taxes ruclips.net/video/7QKvzNV1Qw8/видео.html as well.
Excellent explanation 👍
Thank you, Emin!!! :-)
Awesome!
Yeah, once you get it, it's fairly easy.
Thank you for this!
My pleasure!
thank you!!!
You're welcome! Have a look at the related video on deferred tax assets as well: ruclips.net/video/MvXAljQD4II/видео.html&pp=gAQBiAQB
Great explanation.
Thank you!!!
thankyou, so helpful
Nice to hear that! Have a look at the related video on deferred tax assets as well: ruclips.net/video/MvXAljQD4II/видео.html
Very useful 👌 video.
Can you please make one video on balance sheet and p&l ...explaining in the same way
Thank you very much, Vikash! I think the video on deferred tax assets (the "counterpart" to deferred tax liabilities) might be useful as well: ruclips.net/video/MvXAljQD4II/видео.html In terms of the relationship between balance sheet and P&L, I would recommend this video: ruclips.net/video/wZdaVEX41WQ/видео.html In depth review of the balance sheet: ruclips.net/video/eIjCaeNm-Vk/видео.html In depth review of the income statement: ruclips.net/video/Hq-44PHgAiU/видео.html
Thanks
Amazing content as always 👍
Glad you think so, Anthony! Thank you for watching and commenting.
thanks a lot!
My pleasure!!! I cover its counterpart (deferred tax assets) as well in this video: ruclips.net/video/MvXAljQD4II/видео.html
How long can taxes be deferred for? And is it just for depreciation, or can it be used for other expenses?
Edit: A bit off-topic, but when a corporation issues stock above its book value, does the difference count as profit?
Regardless of what price the stock is issued for, the journal entry is
Dr Cash $x
Cr Shareholder's Equity $x
It goes straight to the balance sheet and has no impact on the P/L accounts, so it can't be profit.
From reading through many annual reports of various large corporations, I have found that deferred tax liabilities are mostly related to depreciation of property, plant and equipment. To a lesser extent, acquisitions related intangible assets are mentioned as another driver of deferred tax liabilities.
There is no "fixed rule" on how long taxes can be deferred for. It depends on how similar or different the treatments (of for example depreciation) are for tax purposes vs book purposes. See also my video on deferred tax: ruclips.net/video/7QKvzNV1Qw8/видео.html
On the question of issuing stock above book value, the more detailed answer is that this difference gets recorded as a credit to paid-in capital. See also my video on treasury stock: ruclips.net/video/knGKpN9sYiw/видео.html
Sir, i want to ask, what is different GAAP P&L with TAX P&L Sir. Thankyou!
GAAP P&L is the profit and loss statement per the accounting rules for reporting to the stock market (IFRS, US GAAP, etc.), while TAX P&L is the profit and loss statement prepared according to the tax accounting rules of the country.
how about for intangible capitalised asset
That depends on whether the tax amortization versus GAAP amortization rules are different in the country that the investment is in. If so, then you would have a deferred tax liability as well.
So we literally report different P/Ls for tax and stock market ?
Correct. If the rules and/or principles you apply for preparing different sets of books are different, then you get different outcomes in the P&L. That's why at a large multinational company I used to work at, one of our internal controls was to have a stat-to-GAAP reconciliation (listing and tying out all line items that were different between statutory submission and US GAAP submission).
@@TheFinanceStoryteller awesome , thank you again for answering all the questions on ur videos , u are one of the few ppl that do that ,, really appreciate the time and effort educating us.
@@sirl1364 Please spread the word to friends and colleagues!!! I love the interaction with the viewers of my videos, let's build our knowledge and understanding together.
Nice video
Thanks
Very interesting. What happens if I do this and sell my company at the end of year 5?
Depends on the structure of the deal (are you selling the assets or the equity), the fiscal status of the company (what type of legal entity, if any), and your local country tax rules. There's no general answer to that question.
If the buyer if the company is buying Deferred Tax liabilities then he will be paying these Taxes in future years to IRS/ Tax Authorities.
If the buyer is not buying the Deferred Tax liabilities then you will give credit to the buyer against this liability
@@SA1984KAUSH thanks, does this apply to real estate as well?
Deferred Tax accouting applies to all industries but Tax rules differs industry and country wise.
@@SA1984KAUSH Thanks for the responses - I guess that’s very American of me to assume that we were talking about the USA.
In the USA, when buying a real estate asset (or the ownership entity of an asset) must one account for the seller’s depreciation schedule or not?
Alternatively phrased, must one account for the effects of accelerated depreciation on the eventual buyer when planning a sale in the coming few years?
wow
Agree! :-)
Hi can u please explain what happens if the company closes in between 1to 5 years what’s the treatment of diff tax thanks
Sorry, can't answer that. It is not my area of expertise.