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What is deffered tax liability and how it is adjusted in
future.Should we take it as part of networth

Answer Posted / nupur jain

What happens is that the company estimates and sets aside one
particular sum every year as the tax, and at the end of the
year when the actual ta is paid, whatever extra money is left
is called deffered tax. This is added to reserves in the
balance sheet. So, while valuing a firm, this deferred tax
amount is to be added to the equity to find the value of
equity of the firm. In future, whenever the actual tax is
greater than the estimated ta, the extra amount is adjusted
from the deferred tax account.

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