Question

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

1) a current or long-term asset.
2) a current or long-term liability.
3) a contra-asset account.
4) All of these are acceptable methods of reporting deferred taxes.

Answer 1

The correct answer is 3) a contra-asset account.

Step-by-step explanation:

Accounting for income taxes can result in the reporting of deferred taxes as any of the following except a contra-asset account. Deferred taxes are recorded on the balance sheet as either a current or long-term asset or liability, depending on whether the temporary differences will result in a future tax asset or future tax liability.

A contra-asset account is a separate type of account that is used to reduce the value of an asset account, but it is not used to report deferred taxes.