Deferred Tax Liabilities
Deferred tax liabilities are taxes a company expects to pay in future periods because of temporary differences between accounting income and taxable income. The term is commonly abbreviated as DTL and is reported on the balance sheet as a liability.
Example: Example: A company uses accelerated tax depreciation in early years while reporting straight-line depreciation for financial reporting, creating a temporary difference that results in a deferred tax liability on the balance sheet. As these differences reverse in later years, the liability unwinds and affects future tax expense.
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