A deferred tax asset is an accounting item that represents a company’s future tax benefits, which arise from overpayment of taxes or the carrying forward of losses. This asset indicates that the company has paid more taxes than it owes and can reduce future tax liabilities when it recognizes these benefits in future periods. Understanding deferred tax assets is crucial for grasping how current tax obligations may differ from reported income due to temporary differences.
congrats on reading the definition of Deferred Tax Asset. now let's actually learn it.