Repaso 1 - Intermediate Accounting III

Intermediate Accounting III
Chapter 19
Income Tax Expense (GAAP)
Exchanges Investors and Creditors
Pretax Financial Income and Income tax expense
Income Tax Payable (IRS)
Taxable Income
Income Taxes Payable
Temporary difference is the difference between the tax basis of an asset
or liability and its reported (carrying or book) amount in the financial
statements that will result in taxable amounts or deductible amounts in
future years
Future Taxable Amounts
Deferred Tax Liability represents the increase in taxes payable in
future yeas as a result of taxable temporary differences existing at the
end of the current year.
Future Deductible Amounts
Deferred Tax Asset represents the increase in taxes refundable in
future years as a result of deductible temporary differences existing at
the end of the current year
Deferred Tax Liability represents the increase in taxes payable in future
years as a result of taxable temporary differences existing at the end of the
current year
Deferred Tax Asset represents the increase in taxes refundable n future
years as a result of deducible temporary differences existing at the end of
the current year.
Temporary Differences
Taxable Temporary Differences deferred tax liability
Deductible Temporary Differences deferred tax asset
Revenues or gains are taxable after they are recognized in the
financial income.
An asset may be recognized for revenues or gains that will result
in taxable amounts in future years when the asset is
recovered.
Expenses or losses are deductible after they are recognized in
financial income
A liability may be recognized for expenses or losses that will

result in deductible amounts in future years when the
liability is settled.
Revenues or gains are taxable before they are recognized in
financial income
A liability may be recognized for an advance payment for goods
or services to be provided in future years. For tax purposes, the
advance payment is included in taxable income upon the receipt
of cash. Future sacrifices to provide good or services that settle
the liability will result in deductible amounts in future years.
Expenses or losses are deductible before they are recognized
in financial income
The cost of an asset may have been deducted for tax purposes
faster than it was expensed for financial reporting purposes.
Amounts received upon future recovery of the amount of the
asset for financial reporting will exceed the remaining tax basis
of the asset and thereby result in taxable amounts in future
years.
Specific Differences
Originating temporary differences is the initial difference between
the book basis and the tax basis of an asset or liability.
Reversing difference occurs when eliminating temporary difference
that originates in prior periods and then removing the related tax
effect from the deferred tax account.
Permanent differences result from items that:
1. Enter into pretax financial income but never into taxable
income
2. Enter into taxable income but never into pretax financial
income
Permanent differences affect only the period in which they occur.
They do not give rise to future taxable or deductible amounts.
They are no deferred tax consequences to be recognized.
I Future deductible amount = deferred tax asset
I Future taxable amount = deferred tax liability
I Permanent difference
Net Operating Loss tax-deductible expenses exceed taxable revenues
The federal tax laws permit taxpayers to use the losses of one year to
offset the profits of other years (loss carryback and loss
carryforward).
Loss Carryback back 2 years and forward 20, losses must be
applied to earliest year first.
Loss Carryforward may be elect to forgo loss carryback and
carryforward losses 20 years
Balance Sheet
Companies should classify deferred tax accounts on the
balance sheet in two categories:
1. Net current amount
2. Net noncurrent amount
Income statement
Companies should allocate income tax expense (or benefit) to
continuing operations, discontinued operations, extraordinary items,
and prior period adjustments.
Asset-Liability Method
Basic Principles
o A current tax liability or asst is recognized for the estimate
taxes payable or refundable on the tax return for the
current year
o A deferred tax liability or asset is recognized for the
estimated future tax effects attributable to temporary
differences and carryforwards.
o The measurement of current and deferred tax liabilities
and assets is based on provisions of the enacted tx law;
the effects of future changes in tax laws or rates are not
anticipated.
o The measurement of deferred tax assets is reduced, if
necessary, by the amount of any tax benefits that, based
on available evidence, are not expected to be realized.

Repaso 1 - Intermediate Accounting III

Uploaded by

Copyright:

Available Formats

Repaso 1 - Intermediate Accounting III

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Repaso 1 - Intermediate Accounting III

Uploaded by

Copyright:

Available Formats

Intermediate Accounting III

A liability may be recognized for expenses or losses that will

You might also like