Deferred method
--places primary emphasis on the matching of revenues and expenses.

(1) Income tax expense = pretax accounting income times the current tax rate

(2) Income tax payable = taxable income times the current tax rate

Any difference between (1) and (2) represents either a deferred charge or credit adjustment to the deferred income tax account.  The deferred income tax account is amortized as the timing differences reverse.  The deferred tax is reversed out of the account at the same rate at which it was created.  No changes are made to reflect changes in tax rates in subsequent years.
Deferred tax credits and charges in the balance sheet represents the cumulative effect of interperiod tax allocation and are not receivables or payables.

Timing differences that originate during the current period are referred to as originating differences while reversals of tax effects arising from differences which originated in prior periods are referred to as reversing differences.

The deferred method is income statement oriented.

Liability method
(or Asset/Liability method)
Objectives:
1. to recognize the amount of income taxes payable or refundable for the current year.
2. to recognized deferred tax liabilities and assets for the future consequences of events that have been recognized in the financial statements or tax returns.
Under this approach, the deferred tax account is considered to be either a deferred liability (credit balance) or a deferred tax asset (debit balance)

Deferred taxes are established based on rates that are in effect for the year(s) in which the temporary differences reverse.  If, after being established, and before reversal, the statutory tax rate for those years change, then the deferred tax account will need to be adjusted to reflect the new rate(s).

Net of Tax Method
Treats deferred taxes as valuation accounts to the assets and/or liabilities giving rise to them, or the assets and liabilities may be reduced directly.

This view recognizes that future taxability and tax deductiblity are important factors in the valuation of individual assets and liabilities.