Question

Accounting for income taxes can result in the reporting of deferred taxes as any of the following except

a. a current or long-term asset.
b. a current or long-term liability.
c. a contra-asset account.
d. All of these are acceptable methods of reporting deferred taxes.

Answer 1

Deferred taxes can be reported as either a current or long-term asset or liability but are not reported as a contra-asset account on the balance sheet.

Step-by-step explanation:

The question pertains to reporting deferred taxes in accounting. Accounting for income taxes may result in recognizing deferred taxes as assets or liabilities on the balance sheet. Deferred taxes can be reported as either a current or long-term asset if they represent the amounts that can be recovered in the future or as a current or long-term liability if they are amounts that are expected to be paid in the future. However, they are not reported as a contra-asset account. This means that option "c. a contra-asset account" is the correct answer to the student's question because deferred taxes cannot be reported as a contra-asset. In financial accounting, contra-asset accounts are used to reduce the value of related assets, typically through allowance for doubtful accounts or accumulated depreciation, not for deferred taxes.