A deferred tax asset indicates that a firm will realize the tax benefit of an event sometime in the future.

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A deferred tax asset represents a future tax benefit that will offset a future tax liability. It arises when a company has paid or accrued expenses for tax purposes that are not yet recognized on the financial statements, but will reduce taxable income in future periods. Thus, a deferred tax asset indicates that the firm will realize the tax benefit of an event sometime in the future.

A Deferred Tax Asset Indicates That a Firm Will Realize