Deferred Income Taxes At the End of Its First Year of Operations,Harding Construction,Inc

question 33

Essay

Deferred income taxes
At the end of its first year of operations,Harding Construction,Inc. ,included in its balance sheet a long-term liability entitled "Deferred Income Taxes."
(a)Briefly explain what deferred income taxes represents,including how this liability came into existence and whether such an item is generally perceived as favorable or unfavorable from company management's point of view.
(b)If Harding Construction,Inc. ,is a successful,growing business,would you expect the liability for deferred income taxes to increase or decrease over the next few years? Explain.

---

Definitions:

Barriers To Entry

Obstacles or hindrances that make it difficult for new competitors to enter a market or industry.

Herfindahl Index

A measure of market concentration that squares the market share of each firm competing in the market and sums the resulting numbers.

Oligopolistic Industry

A market structure characterized by a small number of large firms dominating the industry, leading to limited competition.

Concentration Ratio

is a measure used to determine the market share of the largest firms within an industry, indicating the degree of market control and competition.