Skip to main content
E

Elvie Sawayn

Nov 29, 2024

is deferred gain an asset or liability?

"Can someone clarify whether a deferred gain is classified as an asset or a liability on the financial statements? I’m trying to understand its proper accounting treatment and how it should be recorded. Any insights or examples would be greatly appreciated!"

5 Answers

deferred gain is a liability because it constitutes something that you already received but have not really earned. just incase you wont be able to fulfill your contract (to do or to deliver something) then you are liable to return whatever was received. as for whatever was received for the deferred gain (account debited when the deferred gain was recorded), it is of course an asset.

A
Anonymous

Dec 06, 2024

I suppose it depends upon the circumstances. If you are talking about prepaid income, then the cash received is an asset, and the prepaid income account should be a liability. On the other hand, if you are talking about an installment sale, then the deferred gain is more in the nature of an asset that will be replaced by the cash when it is received — like an account receivable.

Why do you ask the question?

A
Anonymous

Dec 23, 2024

This Site Might Help You.

RE:

is deferred gain an asset or liability?

A
Anonymous

Jan 03, 2025

Better answer. When coles were taken over by wesfarmers the shareholders in coles received two compnenents; a cash component and shares in wesfarmers. Out of this there arose a taxable capital gain. Now those shareholders could if they wished pay CGT on the whole amount or they could pay CGT on the amount applicable to the cash component and then defer the tax on the share compenent until the they sold the wesfarmers shares. Now by doing the former they established a higher cost base for the new wesfarmers held. By doing the latter the calculated cost base of the wesfarmers share is the original cost base applicable to the coles shares that were converted into wesfarmer shares. A capital gain may then arise or not on the sale of the wesfarmers shares. One pays tax now the other may or may not depending on movement in the market.

Want to answer this question?

Join our community to share your knowledge!

Related Questions

8
Does Wells Fargo Bank open on Sundays?

Does Wells Fargo Bank open on Sundays in Bakersfield, California, specifically at the intersection of White Lane and Gos...

1
Present and future values for different interest rates find the following values. compounding/discounting occurs annually. round your

Please find below the present and future values for different interest rates. Compounding and discounting occur annually...

5
What is a bank account nickname?

I’m trying to make my car payment online, and it’s asking for a bank account nickname. What does that mean, and what sho...

3
Why do all shareholders agree on the same goal for the financial​ manager? ?

What is the reason that all shareholders tend to agree on a common goal for the financial manager?

3
Presented below are selected account balances for Homer Winslow Co as of December 31, 2014. Instructions: Prepare closing entries

Presented below are selected account balances for Homer Winslow Co. as of December 31, 2014. Instructions: Prepare the...

3
On December 31, Fighting Okra Cooking Services reports the following revenues and expenses.

On December 31, Fighting Okra Cooking Services reported the following revenues and expenses.

3
Presented below is information from perez computers incorporated. july 1 sold $20,000 of computers to robertson company with terms

Presented below is information from Perez Computers Incorporated. On July 1, the company sold $20,000 worth of computers...

1
It is a GAAP standard that ___ copy(ies) of a check be attached to all documents for filing?

Is it a GAAP requirement to attach a copy of a check to all documents for filing purposes, and if so, how many copies ar...

3
Presented below is information related to equipment owned by Suarez Company at December 31, 2017.

Presented below is the information regarding the equipment owned by Suarez Company as of December 31, 2017. Please revie...

1
How is it possible that Venezuela, with the largest oil and gas wealth on earth, is having such horrible economic problems?

What explains the paradox of Venezuela, a country rich in oil and gas resources, facing such severe economic challenges?