Deferred taxation is a "liability" that may never have to be paid

Question

Quizplus · Accepted Answer

Deferred taxation refers to the temporary differences between the tax base of an asset or liability and its carrying amount in the financial statements. It creates a liability because future taxes will eventually need to be paid, but it may be possible that the liability will never have to be paid if the temporary differences reverse before they become taxable. Therefore, deferred taxation is a liability that may or may not have to be paid.

Deferred Taxation Is a "Liability" That May Never Have to Be