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A deferred charge is a cost recorded in a later accounting period for its expected future benefit, or to comply with the matching principle, which matches costs with revenue. Deferred charges include costs such as those related to startup activities, obtaining long-term debt , or running major advertising campaigns.
Deferred financing costs or debt issuance costs is an accounting concept meaning costs associated with issuing debt (loans and bonds), such as various fees and commissions paid to investment banks, law firms, auditors, regulators, and so on. Since these payments do not generate future benefits, they are treated as a contra debt account.
Deferred expenses (or prepaid expenses or prepayments) are assets, such as cash paid out for goods or services to be received in a later accounting period. When the promise to pay is fulfilled, the related expense item is recognised, and the same amount is deducted from prepayments .
The result is a gap between tax expense computed using income before tax and current tax payable computed using taxable income. This gap is known as deferred tax. If the tax expense exceeds the current tax payable then there is a deferred tax payable; if the current tax payable exceeds the tax expense then there is a deferred tax receivable.
Modern accounting standards typically require that a company provides for deferred tax in accordance with either the temporary difference or timing difference approach. Where a deferred tax liability or asset is recognised, the liability or asset should reduce over time (subject to new differences arising) as the temporary or timing difference ...
When you add money to a tax-deferred account such as a traditional 401(k), it may come out of pre-tax income, reducing your taxable income for the year.
Money invested in an annuity grows tax-deferred, meaning you’re taxed upon withdrawal or when payments begin. ... make it difficult to exit an annuity by imposing high surrender charges. These ...
Such costs are called deferred acquisition expenses (DAE) and capitalization of DAE results in setting up of an asset called deferred acquisition costs (DAC). Establishment of the DAC asset tends to reduce the policy’s first year strain and generally produces a smoother pattern of earnings.