Determining Deferred Income Tax Liability
You can determine either actual income tax liability or future deferred income tax liability. You can calculate deferred depreciation and create deferred depreciation journal entries for your general ledger. Deferred depreciation is the difference in depreciation expense taken for an asset between a tax book and its associated corporate book. You can also project depreciation expense and use those values to determine future income tax liability.
Your tax book and associated corporate book must use the same number of periods per fiscal year. The general ledger period for which you want to create journal entries must be open.
Prerequisite
Run the Depreciation program for your corporate and tax books for this period. See: Running Depreciation.
To calculate journal entries for ACTUAL income tax liability:
1. Choose Journal Entries > Deferred from the Navigator window.
2. Enter the tax book from which you want to create journal entries for your general ledger.
3. Enter the period in your tax book from which you want to create journal entries.
4. Choose Submit to submit a concurrent process to create deferred depreciation journal entries.
5. Review the log file after the request completes.
To calculate FUTURE income tax liability:
You can project depreciation expense for future periods based on the asset's current financial information. To calculate your tax liability, run depreciation projections as soon as you close your corporate and tax books for the fiscal year. You project depreciation expense for several years, beginning with the next fiscal year. When you wait until the end of a fiscal year to project depreciation, Oracle Assets calculates depreciation expense using financial information from the entire previous fiscal year.
2. Run the Recoverable Cost Report for the last period of the fiscal year you just closed to determine the recoverable cost in the corporate and the tax book as of the end of the fiscal year.
3. Adjust the depreciation projection values to account for the permanent differences in depreciation between the two books.
See Also
Submitting a Request
Deferred Income Tax Liability
Recoverable Cost Report
