Deferred tax liability definition
/What is a Deferred Tax Liability?
A deferred tax liability is income taxes payable in a future period. The liability arises from differences in the methods used to account for certain transactions under tax rules and the applicable accounting framework. A considerable number of reporting periods may pass before a deferred tax liability is paid.
Accounting for a Deferred Tax Liability
The initial entry for a deferred tax liability is a credit entry, which is eventually reversed with a debit when the liability is finally settled.