Classifying Deferred Tax Assets and Liabilities (2024)

By default, deferred tax classifies each temporary difference account, based on Total Deferred Tax amount (TRCS_NDefTaxNetVA).

• If the Total Deferred Tax is positive (greater than or equal to zero), then all temporary difference accounts are classified as Noncurrent Assets.
• If the Total Deferred Tax amount is negative (less than zero), each temporary difference account is classified as a Noncurrent Liability.

If you require additional flexibility, you can use the Classifications attribute to define how both National and Regional accounts can be classified.

The following out-of-the-box system members exist:

•TRCS_Classify_ATACCOUNT: When assigned to a level 0 temporary difference account, it is classified based on its closing balance value.

•TRCS_Classify_ASSET: When assigned to a level 0 temporary difference account, it is always classified as a Noncurrent Asset ignoring its closing balance.

•TRCS_Classify_LIABILITY: When assigned to a level 0 temporary difference account, it is always classified as a Noncurrent Liability ignoring its closing balance.

In addition to the out-of-the-box Classification attribute members above (for example, Total Fixed Assets), you can create additional custom attribute members. When a custom attribute is assigned to multiple level 0 temporary difference accounts, the total Closing Balance of those accounts determines the classification for all the accounts assigned the custom attribute.

To classify deferred tax assets and liabilities:

1. From the Home page, click Applications, then Overview, and then Dimensions.
2. Under Cubes, select All. This ensures that Classifications is displayed on the Dimensions tab.
3. Under Name, select Classifications.
   
   
4. On Edit Member Properties: Classifications (Account), view the out-of-the-box Classification attribute members:

   •TRCS_Classify_ATACCOUNT: When assigned to a level 0 temporary difference account, it is classified based on its closing balance value.

   •TRCS_Classify_ASSET: When assigned to a level 0 temporary difference account, it is always classified as a Noncurrent Asset ignoring its closing balance.

   •TRCS_Classify_LIABILITY: When assigned to a level 0 temporary difference account, it is always classified as a Noncurrent Liability ignoring its closing balance.
   
   

5. To create a custom classification group name, perform the following steps:
   1. On Edit Member Properties: Classifications (Account), click the Add Child icon .
   2. On the Add Child dialog box, enter the number of members you want to add, and then click Apply. The Parent Member is displayed as Classifications.
   3. Enter the Member Name of the custom classification group, and then click Save.
   4. Optional: Enter the name of the Alias Table.
6. On the Applications page, click Dimensions, and then click Account.
7. On the Edit Member Properties: Account screen, navigate to the Member Name, and configure the classification group as required by selecting options from each column.
   
   
8. Scroll to the Classifications column, then select the level 0 temporary differences account (default or custom) with which the member is to be associated.
9. Under the Classifications column, select the appropriate classification group name and assign it to the Account.
10. Click Save.
11. After the classification groups have been assigned, under Actions, select Refresh Database.
12. From the Home page, select Tax Provision National or Tax Provision Regional, as required.
13. Under Actions, select Consolidate.
14. From the Home page, select Tax Provision National or Tax Provision Regional, as required, then select Package, and then the Temporary Differences report.
15. Highlight the Total Temporary Differences account, and then scroll to the Temporary Differences Closing Balance column on the far right of the report to verify the closing balance.
16. On the Package tab, select the Deferred Tax report, and verify that the Deferred Tax Asset and Deferred Tax Liability classifications based on your configuration are correct.
17. From the Home page, click TAR (Tax Account Rollforward Report), and under Total Deferred Tax , verify that the Deferred Tax Asset and Deferred Tax Liability classifications based on your configuration are correct.