[Neil Dierolf]

Hello All,

It was my understanding that starting in 2017 ALL deferred tax assets and liabilities were to be classified as noncurrent. However, I am being graded as incorrect on some of the sims in my study materials on questions related to this when I classify as noncurrent. I’m not sure if the course has just failed to update their simulations or if I am misunderstanding the topic. Could anyone possibly clarify what the correct classification is for deferred tax assets and liabilities?

Any info would be much appreciated. Thank you.

[brokeonbecker4]

Hi! I'm certainly no tax expert, but this was my favorite section in my corporate tax class. I took FAR at the beginning of the month, and you are correct. This link helped me: https://www.pwc.com/us/en/cfodirect/publications/in-brief/fasb-simplifies-balance-sheet-classification-deferred-taxes.html

(Not trying to promote PwC, I just found it useful during research when I initially struggled with this topic.)

Becker also states, “Under U.S. GAAP, deferred tax liabilities and assets should be classified and reported as a non-current amount on the balance sheet. This treatment aligns with IFRS. All deferred tax liabilities and assets must be offset (netted) and presented as one amount (a net non-current asset or a net non-current liability), unless the deferred tax liabilities and assets are attributable to different tax-paying components of the entirety or to different tax jurisdictions.”

[Neil Dierolf]

Awesome. Thanks so much for the response. I guess some of the sims in my study materials have not been updated to reflect the change. Good luck in your studies!

[Author]

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