Deferred tax asset

Tax paid early, or a loss carried forward, that will reduce a future bill. It is worth something only if there are future profits to use it against.

Where you will meet it

Deferred tax asset appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Tell current tax expense apart from deferred tax
  CFA Level I · Financial Statement Analysis

  “Where a difference will reverse in future it creates a deferred tax asset or liability.”

• Explain deferred tax assets and liabilities and the valuation allowance
  CFA Level I · Financial Statement Analysis

  “A deferred tax asset arises where the reverse holds, or from unused tax losses carried forward.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with D · Glossary