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Lesson details
- Estimated study time
- 150 min
Learning objectives (4)
The deferred schedule answers a future question at the reporting date: what taxable or deductible amounts will result as the entity recovers and settles the book carrying amounts already recognized?
Measure by difference and reversal period
For each row, multiply the supported future taxable or deductible amount by the enacted rate expected to apply in its reversal period. If rates differ across periods, split the row. Do not use a proposed rate, an average effective rate, or the current return rate merely because it is convenient.
| Difference | Future effect | Amount | Reversal rate | Gross deferred tax |
|---|---|---|---|---|
| Equipment carrying amount over tax basis | Taxable | $300,000 | 21% | $63,000 DTL |
| Warranty liability deductible at payment | Deductible | $120,000 | 21% | $25,200 DTA |
| Accrued compensation deductible at payment | Deductible | $80,000 | 21% | $16,800 DTA |
| NOL carryforward | Deductible attribute | $200,000 | 21% | $42,000 DTA |
| Tax credit carryforward | Direct tax attribute | — | — | $15,000 DTA |
The credit is already a tax amount; multiplying it by 21 percent again would understate the gross DTA.
Reconcile gross before net
Sum gross DTAs by source and gross DTLs by source. The valuation allowance is a separate contra-asset, not a way to delete the gross schedule. A net DTA or DTL for one jurisdiction is a presentation result after the recognition and realization work, not the only retained workpaper number.
Deferred tax expense or benefit is anchored in the movement of recognized net deferred balances, adjusted for effects assigned outside continuing operations or otherwise separately accounted for. It should be derived from beginning and ending schedules, not used as the balancing plug that makes an entry work.
Present noncurrent, net only within the boundary
Under the current ASU 2015-17 model, DTAs and DTLs are noncurrent in a classified statement of financial position. Offsetting remains limited to the same tax-paying component and jurisdiction. Cedar Trail cannot net a domestic federal DTA against a foreign DTL simply because the consolidated total is smaller.
Inspect the deferred schedule
For each row, show carrying amount, tax basis, future taxable or deductible amount, reversal period, enacted-rate source, gross DTA or DTL, jurisdiction, and tax-paying component. Reconcile gross opening to gross ending balances and retain any recognition-exception issue as unresolved rather than assigning it a formula.