![]() ![]() ![]() Tuition: Tuition payments are another example of prepaid income.For example, a customer may pay for a year-long subscription to a streaming service, but the service will not be accessed until the customer actually uses the subscription. These payments are usually made in advance of the customer receiving any goods or services. ![]() Subscriptions: Subscriptions are a type of prepaid income that is becoming increasingly popular.The customer then has the ability to use the card like a regular credit card, but the card issuer does not have to provide any goods or services until the customer actually uses the card. In this case, a customer will purchase a card and load it with a certain amount of money. Prepaid Credit Cards: Prepaid credit cards are a popular form of prepaid income.In this case, the income is recognized when the premium is received, even though the service may not be provided until much later. When a policyholder pays for a policy, the insurer receives payment for a service that has not yet been provided. Insurance premiums: Insurance premiums are another example of prepaid income.The landlord is then able to recognize income from the rent payments, but the tenant does not receive any goods or services until the tenancy begins. These payments are received before the tenant is able to occupy the property. Rent payments: Rent payments are a common example of prepaid income.Generally, company controllers prefers to overestimate the needed tax deposits. Often, prepaid income taxes are the result of poor assumptions. Deferred income tax asset can occur for a period of longer than one year.There is one great difference between prepaid income tax and a deferred tax asset. Either it results in a tax refund or the credit written off towards the tax liability of the next period. This prepayment can create one of two results. Then, when the year-end taxes are found to be less than the taxes paid earlier, prepayment on income taxes has occurred. In such a case, taxes are estimated from the financial records of the previous year. The most usual situation when prepayment on income taxes occurs is because of the over-estimation of tax deposits. Prepaid income tax is recognized as a form of prepaid expense. Prepaid income are generally taxable under the federal income tax law. It is also called a deferred income tax asset. In accounting, Prepaid Income Tax is recognized as an asset listed on the balance sheet that constitutes taxes that have been already paid despite not yet having been incurred. ![]()
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