stof sestion Simmons Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax: § 430,000; Dividends declared: 320,000; Net income: 1,000,000 and Retained eamings, retained eamings, 1/1/07, as adjusted at Oa Ob. Oc Od $1,570,000. $2,430,000. $3,110,000. $2,000,000. 1/1/07, as reported 2,000,000, Simmons should report

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.