Question

Briefly explain/define Valuation Equity and its potential sources.

Briefly explain why deferred taxes are included on the balance sheet What would the implications of ignoring deferred taxes be for the B/S?

Answer 1

Answer - Equity valuation is a blanket term and is used to refer all tools and techniques used by investors to find out the true value of a company's Equity. In accounting, Equity refers to the book value of stockholders Equity on the balance sheet which is equal to Assets minus Liabilities.

Deferred tax refers to either a positive (Assets) and nagative (liability) entry on a company's balance sheet regarding tax owed or over paid dur to temprory diffrences. Deferred tax can fall into one of two categories. Deferred tax liability and Deferred tax Assets. Both will appear as entries on the Balance sheet and represent the negative and positive amounts of tax owed. Note that ther can be one without the other - a company can have only Deferred tax liability or Deferred tax assests.