Quick Answer: Is Deferred Tax Fictitious Asset?

What are fictitious assets examples?

The examples of Fictitious Assets are as follows:The Net Loss of the company.The Promotional (Marketing) expenses of the company.The Underwriting commission.The Preliminary Expenses of the Company.The Discount allowed on the issue of shares.The loss incurred on the issue of debentures..

What’s a big word for fake?

Answer and Explanation: There are many other words that can be used in substitution of the word ‘fake’, such as ‘false’, ‘erroneous’, ‘sham’, ‘fraud’, ‘phony’, ‘counterfeit’,…

What is an example of a prepaid expense?

An example of a prepaid expense is insurance, which is frequently paid in advance for multiple future periods; an entity initially records this expenditure as a prepaid expense (an asset), and then charges it to expense over the usage period. Another item commonly found in the prepaid expenses account is prepaid rent.

Is advertisement suspense a fictitious asset?

Fictitious Assets such as o Debit balance of Profit and Loss Account o Advertisement Suspense Account etc. are not transferred to Realisation Account.

What are some examples of a deferred tax asset?

The simplest example of a deferred tax asset is the carryover of losses. If a business incurs a loss in a financial year, it usually is entitled to use that loss in order to lower its taxable income in the following years. 2 In that sense, the loss is an asset.

What is current deferred tax asset?

Current Deferred Tax Assets are the current amount a company has overpaid for that can reduce the taxes the company will pay later on. It is the opposite of deferred tax liability. … It is an accounting term under the current assets on the company’s finance sheet.

Is Deferred tax a current liability?

Deferred income tax is a result of the difference in income recognition between tax laws (i.e., the IRS) and accounting methods (i.e., GAAP). Deferred income tax shows up as a liability on the balance sheet. … Deferred income tax can be classified as either a current or long-term liability.

Does depreciation create deferred tax asset?

One common situation that gives rise to deferred tax liability is depreciation of fixed assets. Tax laws allow for the modified accelerated cost recovery system (MACRS) depreciation method, while most companies use the straight-line depreciation method for financial reporting.

Is Goodwill a fictitious assets?

Goodwill is not a fictitious asset . it is an intangible asset as it cannot be seen or touched. fictitious assets have no market value but Goodwill has a market value as it can be sold. therefore Goodwill is not a fictitious asset.

What does fictitious mean?

created, taken, or assumed for the sake of concealment; not genuine; false: fictitious names. of, relating to, or consisting of fiction; imaginatively produced or set forth; created by the imagination: a fictitious hero.

Is deferred tax asset a debit or credit?

Debits. Corporate bookkeepers debit an asset account to increase its value and credit the account to reduce its worth. A deferred tax asset arises when a company’s fiscal income is higher than its accounting income.

What is the journal entry for deferred tax asset?

We have to create Deferred Tax liability A/c or Deferred Tax Asset A/c by debiting or crediting Profit & Loss A/c respectively. The Deferred Tax is created at normal tax rate. Please, note that both the entries are not passed but only liability or asset is created for net amount of deferred tax.

What is fictitious asset?

Fictitious asset is not a real asset but deferred expenses that are shown in assets in the balance sheet. … Expenses or losses that are not written off during the accounting period of occurrence because they give long-term benefit over a period of time are categorized as fictitious assets.

Is prepaid expense a debit or credit?

The initial journal entry for prepaid rent is a debit to prepaid rent and a credit to cash. These are both asset accounts and do not increase or decrease a company’s balance sheet.

Is prepaid expense a fictitious asset?

Fictitious assets are not assets at all however they are shown as assets in the financial statements only for the time being. In fact, they are expenses and losses which for some reason couldn’t be written off during the accounting period of their incidence. … Prepaid rent is not a fictitious asset.

Is prepaid rent a deferred tax asset?

Accrual of loss contingency, tax-deductible when paid. The taxable income will be greater than the pretax accounting income, creating a deferred tax asset. … deferred tax liability. The balance sheet account is an asset – prepaid rent.

How is deferred tax calculated?

The deferred tax liability represents a future tax payment a company is expected to make to appropriate tax authorities in the future, and it is calculated as the company’s anticipated tax rate times the difference between its taxable income and accounting earnings before taxes.

What is the difference between factitious and fictitious?

Factitious derives from factus and therefore facere meaning to do or to make and therefore something done and based on fact. Fictitious derives from fictus and therefore fingere meaning to shape (or devise) and therefore something feigned.