In classifying deferred taxes on the balance sheet, an entity should net the current deferred tax asset and liability amount and net the noncurrent deferred tax asset and liability amount thus reporting only one current and one noncurrent deferred tax amount.

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According to accounting standards such as IFRS (International Financial Reporting Standards) and US GAAP (Generally Accepted Accounting Principles), an entity is allowed to offset deferred tax assets and liabilities if they are levied by the same governing taxation laws and the entity has the legal right to set off current tax assets against current tax liabilities. Therefore, entities often report one net current deferred tax amount and one net noncurrent deferred tax amount on the balance sheet.

In Classifying Deferred Taxes on the Balance Sheet, an Entity