A deferred tax asset is recorded when expenses are recorded on the income statement but not allowed to be deducted for tax purposes until a later accounting period.

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Quizplus · Accepted Answer

This is correct. A deferred tax asset arises when expenses or losses are recorded on the income statement and the tax laws allow them to be deducted in a future period, resulting in a lower tax liability. The deferred tax asset reflects the tax benefit to be received in the future.

A Deferred Tax Asset Is Recorded When Expenses Are Recorded