The differences in methods used to report income for tax purposes and for financial reporting lead many firms to effectively have two different sets of accounting records - their tax accounting records (sometimes referred to as "Tax Books") and their financial reporting records (sometimes referred to as "Financial Reporting Books").
differed tax accounting criteria
1. A transaction or event is accounted for differently in an entity's financial reports and income tax returns.
2. The accounting effect of the difference in accounting policies is temporary in that the early period effects of the difference are reversed in later periods.
3. The accounting difference has tax consequence
The difference in the use of the two depreciation methods has tax consequences. The higher early year tax deductions for depreciation lead to lower taxable income than if the company used straight-line depreciation for tax return purposes. In the later years of the asset's depreciable life this situation is reversed.
Differed tax liability
is the account a corporation uses to report on its balance sheet the amount of its future additional income taxes resulting from future taxable ammounts
A deferred tax liability is the future tax consequences attributable to temporary accounting differences between financial and tax accounting policies where the future tax consequences result in higher future taxes.
differed tax assets
Deferred tax assets arise when temporary differences between a company's financial and tax accounting result in future lower taxes.