Final answer:
While it may seem counterintuitive, a company can indeed have both deferred tax assets and liabilities at the same time, reflecting prepayments and timings of income recognition for financial and tax reporting purposes.
Step-by-step explanation:
The statement that you CANNOT have BOTH concurrent assets and liabilities in the deferred tax accounts is actually misleading. In accounting, especially under principles like the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), it is possible to have both deferred tax assets and deferred tax liabilities on the balance sheet at the same time.
Deferred tax assets arise when a company has prepaid taxes or has carried forward losses that can be used to offset future taxable income. On the other side, deferred tax liabilities occur when there is a temporary difference between the accounting income and taxable income, which results in taxable amounts in future periods. This is often related to differences in the timing of when income and expenses are recognized.