Deferred tax balances are presented as noncurrent in a classified statement of financial position. Offsetting occurs only inside a supported tax-paying component and tax jurisdiction. Preserve the gross schedules and valuation allowance even when the statement displays one net amount.
Apply the presentation boundary
ASC 740-10-45-4 requires noncurrent classification. ASC 740-10-45-6 limits offsetting to one tax-paying component within one jurisdiction and includes the related valuation allowance.
One domestic component has a $79,000 net deferred tax asset and a $63,000 deferred tax liability. It presents a $16,000 net noncurrent asset under the supplied offsetting facts. A foreign component's $8,000 liability does not enter that net merely because both entities are consolidated. Retain component, jurisdiction, gross balance, allowance, and statement line in the workpaper. This page does not determine legal taxpayer status or enforceable offset rights outside Topic 740.
A consolidation worksheet should retain separate legal-component subtotals even when only one net amount appears for a permitted group.
Put the concept to work
Analyze this concept
- Present deferred balances as noncurrent in a classified balance sheet and apply netting only within the supported tax-paying-component and jurisdiction boundary.
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