Question
In: Accounting
Why are deffered taxex included on the balance sheet and can someone explain valuation equity and...
Why are deffered taxex included on the balance sheet and can someone explain valuation equity and its sources?
Solutions
Expert Solution
Hey,
Deferred Taxes as the name suggest, this are taxes which are deferred to a future period. If I take an example of Depreciation it will make you understand better:
Depreciation as per Accounts books: 50000
Depreciation as per Tax books: 30000
We can see that we have charged 20000 more depreciation in books, which can be interpreted as below:
Less depreciation charged in tax -> More profit showed in tax -> More Taxes paid this year(similar to advances which will be reversed in future years). vice versa situation is also possible.
Hope this explanation helps you to understand why we include deferred taxes in balance-sheet.
Valuation Equity:
Equity of the company comprises of various items like Stocks, Additional paid-in capital, Retained Earnings and Accumulated Other Comprehensive Income. The main source is of equity is through the earnings done by the companies. However, the valuation of equity on the stock market is not based on earnings alone, it depends on various factors like demand supply, government policies etc.
Hope this explanation helps you understand the concepts better.
ekkarill92 answered 1 year agoRelated Solutions
can someone explain the write-down of goodwill for impairment? i know it affects the balance sheet...
can
someone explain the write-down of goodwill for impairment? i know
it affects the balance sheet and imcome statement, bit i do mot
completely understand what exactly it is
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2017:
Shareholders'
Equity
($
in millions)
Common stock, 310
million shares at $1 par
$
310
Paid-in capital—excess of
par
2,790
Paid-in capital—share
repurchase
1
Retained earnings
2,100
Required:
1. During 2018, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31, 2020:
Shareholders' Equity ($ in millions) Common stock, 400 million
shares at $1 par $ 400 Paid-in capital—excess of par 3,200 Paid-in
capital—share repurchase 1 Retained earnings 3,000 Required: 1.
During 2021, TNL Systems reacquired shares of its common stock and
later sold shares in two separate transactions. Prepare the entries
for both the purchase and subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2020:
Shareholders' Equity
($ in millions)
Common stock, 270 million shares at $1 par
$
270
Paid-in capital—excess of par
1,890
Paid-in capital—share repurchase
2
Retained earnings
1,700
Required:
1. During 2021, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2020:
Shareholders' Equity ($ in millions)
Common stock, 260 million shares at $1 par $ 260
Paid-in capital—excess of par 2,080
Paid-in capital—share repurchase 2
Retained earnings 1,600
Required:
1. During 2021, TNL Systems reacquired shares of its common
stock and later sold shares in two separate transactions. Prepare
the entries for both the purchase and subsequent resale of the
shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2017:
Shareholders'
Equity
($
in millions)
Common stock, 380
million shares at $1 par
$
380
Paid-in capital—excess of
par
3,040
Paid-in capital—share
repurchase
1
Retained earnings
2,800
Required:
1. During 2018, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31, 2017:
Shareholders' Equity ($ in millions) Common stock, 300 million
shares at $1 par $ 300 Paid-in capital—excess of par 2,400 Paid-in
capital—share repurchase 2 Retained earnings 2,000 Required: 1.
During 2018, TNL Systems reacquired shares of its common stock and
later sold shares in two separate transactions. Prepare the entries
for both the purchase and subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2017:
Shareholders' Equity
($ in millions)
Common stock, 340 million shares at $1 par
$
340
Paid-in capital—excess of par
2,720
Paid-in capital—share repurchase
1
Retained earnings
2,400
Required:
1. During 2018, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in
capital:
Preferred stock, 8.5%, 94,000
shares at $1 par
$
94,000
Common stock, 444,400 shares at
$1 par
444,400
Paid-in capital—excess of par,
preferred
1,555,000
Paid-in capital—excess of par,
common
2,605,000
Retained earnings
9,345,000
Treasury stock, at cost; 4,400
common shares
(44,000
)
Total shareholders' equity
$
13,999,400
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in
capital:
Preferred stock, 7.5%, 82,000
shares at $1 par
$
82,000
Common stock, 323,200 shares at
$1 par
323,200
Paid-in capital—excess of par,
preferred
1,445,000
Paid-in capital—excess of par,
common
2,495,000
Retained earnings
8,245,000
Treasury stock, at cost; 3,200
common shares
(38,400
)
Total shareholders' equity
$
12,551,800
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
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