Explain Deferred Tax Liability

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Deferred Tax Liability is a balance sheet item that represents taxes that will be payable in the future due to temporary differences between accounting and tax rules.

Deferred Tax Liability arises when a company's taxable income is greater than its accounting income, leading to taxes being deferred to a future period.
It represents the amount of income tax payable in the future based on temporary differences between the carrying amount of assets and liabilities in the financial statements and their tax bases.
Examples include accelerated depreciation for tax purposes resulting in lower taxable income in the short term but higher taxable income in the future when the depreciation expense is lower for accounting purposes.
Deferred Tax Liability is a non-current liability on the balance sheet and is recognized under the principles of accrual accounting.
It is important for tax consultants to understand Deferred Tax Liability as it impacts a company's financial statements and tax planning strategies.

Explain Deferred Tax Liability

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