Deferred Credit

Are deferred credits included in total assets?

Yes, all deferred credits are included in total assets.

What is the proper accounting for deferred credit?

Generally, deferred credits are classified as liability or owner’s equity depending on how the company accounts for them. For instance, deferred tax liabilities are generally classified as a liability while stock options are considered part of owner’s equity. Often, an account is set up in the deferred credit area to house any unusual items that are not classified as liabilities or owner’s equity.

Is there a special name for deferred credits?

The term “deferred credit” should only be used when it is impossible to properly classify an item as a liability or owner’s equity. If such an item can be appropriately classified into one of the existing accounts, then that account name should be used in its place. For example, tax related items usually have their own unique title depending on what the nature of the tax is.

What are some examples of deferred credits?

Tax related items such as deferred tax liabilities and benefits from the investment credit.

What is a deferred credit transaction?

A transaction involving a company’s deferral of revenue or expenses, or both, for some period. Other examples of transactions involving deferred credits include employees compensated with stock options and sales accounted for using the installment method.