[Anonymous]

Totally confused on what goes under DTA or DTL.. helpppp meeee

[Anonymous]

I just went through this section and someone posted something that has helped me.

If your revenue is higher in a future period then you will have more taxable income later = DTL

If your expenses are lower in a future period then you will have more taxable income later = DTL

The opposite is true for DTA

lower revenue later = less taxable income later = DTA

higher expenses later = less taxable income later = DTA

So as an illustration: Revenues are taxable when received, but not recognized as revenues on the income statement until earned. If you receive rent revenue in advance you will pay the tax on it in the current period, but it will not count towards the pretax income on your income statement until later during the actual rental period. Thus, you will have a DTA because you will have lower revenue (for tax purposes) in a future period.

I hope that helped.

[Anonymous]

I just went through this section and someone posted something that has helped me.

If your revenue is higher in a future period then you will have more taxable income later = DTL

If your expenses are lower in a future period then you will have more taxable income later = DTL

The opposite is true for DTA

lower revenue later = less taxable income later = DTA

higher expenses later = less taxable income later = DTA

So as an illustration: Revenues are taxable when received, but not recognized as revenues on the income statement until earned. If you receive rent revenue in advance you will pay the tax on it in the current period, but it will not count towards the pretax income on your income statement until later during the actual rental period. Thus, you will have a DTA because you will have lower revenue (for tax purposes) in a future period.

I hope that helped.

[Anonymous]

That helped alot!! thank you

[Anonymous]

That helped alot!! thank you

[Author]

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