This document discusses different types of long-term liabilities and deferred credits accounts. The "OTHER LONG-TERM LIABILITIES" account is used to record liabilities not classified elsewhere. The "DEFERRED CREDITS" account records money received before it is earned, such as unearned revenue. The "OTHER DEFERRED CREDITS" account is similar but for items not in the deferred credits to income account. Deferred income tax is a liability from income earned but not taxed yet due to accounting and tax differences, to be paid later.
1. LONG-TERM LIABILITIES
(450) OTHER LONG-TERM LIABILITIES
This account is used to record all other long-term liabilities not falling under any of the
specific long-term liability accounts.
Debit this account for:
Settlement/Payment of the long-term liabilities
Credit this account for:
• Incurrence of other long-term liabilities not classified under specific accounts
• Other liabilities
Example:
Government acquired a land using mortgage.
(Dr) Land
(Cr) Mortgage Payable
2. DEFERRED CREDITS
A deferred credit could mean money received in advance of it being earned, such as deferred revenue,
unearned revenue, or customer advances. A deferred credit could also result from complicated
transactions where a credit amount arises, but the amount is not revenue.
A deferred credit is reported as a liability on the balance sheet. Depending on the specifics, the deferred
credit might be a current liability or a noncurrent liability. In the past, it was common to see a noncurrent
liability section with the heading Deferred Credits.
(455) OTHER DEFERRED CREDITS
This account is used to record collections received for items not specifically included in account
“Deferred Credits to Income”
Debit this account for:
Transfer to appropriate account
Credit this account for:
• Collections for items not specifically included in account “Deferred Credits to Income”
Example:
3. Definition of 'Deferred Income Tax'
A liability recorded on the balance sheet that results from income already earned and
recognized for accounting, but not tax, purposes. Also, differences between tax laws
and accounting methods can result in a temporary difference in the amount of
income tax payable by a company. This difference is recorded as deferred income tax.
In other words, this would mean that income has been realized, but the tax on that
income has not.
For example, let's say that the amount of tax that a business should pay is $100,000,
but due to tax laws, the amount actually payable for this fiscal year is $85,000. The
additional $15,000 would be a deferred income tax liability that the company would
need to pay later on.
4. (452) DEFERRED REAL PROPERTY TAX INCOME
(452) DEFERRED SPECIAL EDUCATION TAX INCOME