6/12/2023 0 Comments Deferred tax calculation excelThe same scenario often happens with taxes, but the timing differences can happen over much longer time frames.Īll large companies prepare two sets of financial statements: one for “Book” purposes (shown in annual and quarterly reports) and one for “Tax” purposes (for the government). If a company lists an expense on its Income Statement, that does not necessarily mean the company has paid for that expense in cash in the period shown on its Income Statement.įor example, maybe the company received a service or product and listed the expense due to the accrual principle of accounting, but the company is delaying cash payment until the due date on the invoice. Net Operating Losses Definition: When a company loses money in one financial reporting period (i.e., it records negative Pre-Tax Income), it accrues “Net Operating Losses” that it can use to reduce its Taxable Income in future periods these Net Operating Losses may also have value to potential acquirers in M&A deals.
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