ST Deferred Tax Assets
DeferredTaxAssetsNetCurrentDeferredTaxAssetsLiabilitiesNetCurrentShort-term deferred tax assets are the portion of a company's deferred tax assets that was classified as current on the balance sheet, representing expected future reductions in income taxes tied to items that would reverse within a year. A deferred tax asset arises when a company has recognized an expense or loss for accounting purposes before it can deduct it on its tax return, or holds tax loss and credit carryforwards it expects to use.
Current classification of deferred taxes has been eliminated for US GAAP filers, so this line now appears mainly in historical balance sheets. Today all deferred tax assets and liabilities are reported as noncurrent.
Deferred taxes are accounted for under ASC 740. Before 2016, companies split deferred tax assets and liabilities between current and noncurrent based on the classification of the asset or liability that gave rise to them, such as an allowance for credit losses or an accrued expense. In XBRL the current portion was tagged DeferredTaxAssetsNetCurrent, or DeferredTaxAssetsLiabilitiesNetCurrent when shown after netting against deferred tax liabilities in the same jurisdiction. Either figure was stated after any valuation allowance for benefits not expected to be realized.
ASU 2015-17 simplified the rule by requiring every deferred tax balance to be classified as noncurrent. It took effect for public business entities for annual periods beginning after December 15, 2016, and many companies adopted it early. After adoption, amounts that had been current were combined into the noncurrent deferred tax lines, so a series built from older filings will show short-term deferred tax assets that simply stop, with the balance moving into long-term deferred tax assets rather than disappearing.
For analysis, the break matters mostly in historical comparisons. Current assets and the current ratio of the same company can shift at adoption with no change in the business. Deferred tax assets were never a source of cash in the usual sense; they reduce future tax payments only if the company earns enough taxable income, which is why the size of the valuation allowance, disclosed in the income tax note, is worth checking.
A: ASU 2015-17 requires all deferred tax assets and liabilities to be presented as noncurrent. The rule applied to public companies for annual periods beginning after December 15, 2016.
A: Expenses recognized in the financial statements before they are deductible for tax, such as certain accruals and reserves, along with tax loss and credit carryforwards. Each will lower taxes owed in the future.
A: It is a reduction of deferred tax assets for the portion a company does not expect to realize, usually because it may not earn enough future taxable income. Deferred tax assets are reported net of it.
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