ACCOUNTING FOR INCOME TAXES CHAPTER 16 INCOME TAXES
![ACCOUNTING FOR INCOME TAXES CHAPTER 16 INCOME TAXES ACCOUNTING FOR INCOME TAXES CHAPTER 16 INCOME TAXES](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-1.jpg)
![Learning Objectives The concept of deferred taxes Ø Permanent differences: Ø Temporary differences. Apply Learning Objectives The concept of deferred taxes Ø Permanent differences: Ø Temporary differences. Apply](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-2.jpg)
![FUNDAMENTAL REPORTING Financial & Tax Reporting FINANCIAL REPORTING - Useful Information INCOME TAX SYSTEM: FUNDAMENTAL REPORTING Financial & Tax Reporting FINANCIAL REPORTING - Useful Information INCOME TAX SYSTEM:](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-3.jpg)
![Fundamentals of Accounting for Income Taxes FINANCIAL REPORTING TAX REPORTING vs. SEC Investors and Fundamentals of Accounting for Income Taxes FINANCIAL REPORTING TAX REPORTING vs. SEC Investors and](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-4.jpg)
![INCOME COMPUTATION: Two sets of rules q Pretax Financial (Accounting) Income: – according to INCOME COMPUTATION: Two sets of rules q Pretax Financial (Accounting) Income: – according to](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-5.jpg)
![DIFFERENT TAXABLE Depreciation GAAP: (based on estimated amount) IRS: The Modified Accelerated Cost Recovery DIFFERENT TAXABLE Depreciation GAAP: (based on estimated amount) IRS: The Modified Accelerated Cost Recovery](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-6.jpg)
![Temporary Differences TIMMING DIFFERENCES A temporary difference corporation’s pretax financial income & taxable income Temporary Differences TIMMING DIFFERENCES A temporary difference corporation’s pretax financial income & taxable income](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-7.jpg)
![HOW IS ADVANCED SUBSCRIPTION RECORDING ACCORDING TO: Ø GAAP? Ø IRS? For recording expense HOW IS ADVANCED SUBSCRIPTION RECORDING ACCORDING TO: Ø GAAP? Ø IRS? For recording expense](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-8.jpg)
![STOP & THINK! Is it possible for a company to have both deferred tax STOP & THINK! Is it possible for a company to have both deferred tax](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-9.jpg)
![Examples: Types of Temporary Differences Deferred tax assets result in deductible amounts in the Examples: Types of Temporary Differences Deferred tax assets result in deductible amounts in the](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-10.jpg)
![Permanent Differences Some items of revenue and expense that a corporation reports for financial Permanent Differences Some items of revenue and expense that a corporation reports for financial](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-11.jpg)
![Book-Tax Differences – Permanent Examples of permanent book-tax differences Tax-exempt state and local bond Book-Tax Differences – Permanent Examples of permanent book-tax differences Tax-exempt state and local bond](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-12.jpg)
![CONT… PART II CHANGES IN TAX RATES CONT… PART II CHANGES IN TAX RATES](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-13.jpg)
![ACCOUNTING FOR INCOME TAXES CHAPTER 16 PART II INCOME TAXES DEFERED TAX: WITH CHANGES ACCOUNTING FOR INCOME TAXES CHAPTER 16 PART II INCOME TAXES DEFERED TAX: WITH CHANGES](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-14.jpg)
![Tax Rate Considerations Deferred tax assets and liabilities should be determined using the future Tax Rate Considerations Deferred tax assets and liabilities should be determined using the future](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-15.jpg)
![Revision of Future Tax Rates When a change in tax rate is enacted, its Revision of Future Tax Rates When a change in tax rate is enacted, its](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-16.jpg)
![Net Operating Losses (NOL) Tax laws often allow a company to use tax NOLs Net Operating Losses (NOL) Tax laws often allow a company to use tax NOLs](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-17.jpg)
![Accounting for Net Operating Losses Loss Carryback Back 2 years and forward 20 years Accounting for Net Operating Losses Loss Carryback Back 2 years and forward 20 years](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-18.jpg)
![Balance Sheet Classification Deferred tax assets/liabilities are classified as current or noncurrent based on Balance Sheet Classification Deferred tax assets/liabilities are classified as current or noncurrent based on](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-19.jpg)
![INTERPERIOD/INTRAPERIOD INCOME TAX ALLOCATION INTERPERIOD: is to recognize an asset or liability for the INTERPERIOD/INTRAPERIOD INCOME TAX ALLOCATION INTERPERIOD: is to recognize an asset or liability for the](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-20.jpg)
- Slides: 20
![ACCOUNTING FOR INCOME TAXES CHAPTER 16 INCOME TAXES ACCOUNTING FOR INCOME TAXES CHAPTER 16 INCOME TAXES](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-1.jpg)
ACCOUNTING FOR INCOME TAXES CHAPTER 16 INCOME TAXES
![Learning Objectives The concept of deferred taxes Ø Permanent differences Ø Temporary differences Apply Learning Objectives The concept of deferred taxes Ø Permanent differences: Ø Temporary differences. Apply](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-2.jpg)
Learning Objectives The concept of deferred taxes Ø Permanent differences: Ø Temporary differences. Apply the concept & compute: ØChanges in Enacted Tax rates Ø Use of Valuation Allowance The Provisions of Tax loss carry-backs/forwards Financial statement presentation and disclosure 2
![FUNDAMENTAL REPORTING Financial Tax Reporting FINANCIAL REPORTING Useful Information INCOME TAX SYSTEM FUNDAMENTAL REPORTING Financial & Tax Reporting FINANCIAL REPORTING - Useful Information INCOME TAX SYSTEM:](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-3.jpg)
FUNDAMENTAL REPORTING Financial & Tax Reporting FINANCIAL REPORTING - Useful Information INCOME TAX SYSTEM: Equitable collection of revenue 3
![Fundamentals of Accounting for Income Taxes FINANCIAL REPORTING TAX REPORTING vs SEC Investors and Fundamentals of Accounting for Income Taxes FINANCIAL REPORTING TAX REPORTING vs. SEC Investors and](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-4.jpg)
Fundamentals of Accounting for Income Taxes FINANCIAL REPORTING TAX REPORTING vs. SEC Investors and Creditors Pretax Financial Income GAAP Income Tax Expense Taxable Income Tax Code Income Tax Payable
![INCOME COMPUTATION Two sets of rules q Pretax Financial Accounting Income according to INCOME COMPUTATION: Two sets of rules q Pretax Financial (Accounting) Income: – according to](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-5.jpg)
INCOME COMPUTATION: Two sets of rules q Pretax Financial (Accounting) Income: – according to GAAP (FASB 109) is income before income taxes for financial reporting purposes q Taxable Income: - according to IRS rules is the amount of income on which the income tax is based Therefore the above two income differ 5
![DIFFERENT TAXABLE Depreciation GAAP based on estimated amount IRS The Modified Accelerated Cost Recovery DIFFERENT TAXABLE Depreciation GAAP: (based on estimated amount) IRS: The Modified Accelerated Cost Recovery](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-6.jpg)
DIFFERENT TAXABLE Depreciation GAAP: (based on estimated amount) IRS: The Modified Accelerated Cost Recovery System (MACRS) Page 6
![Temporary Differences TIMMING DIFFERENCES A temporary difference corporations pretax financial income taxable income Temporary Differences TIMMING DIFFERENCES A temporary difference corporation’s pretax financial income & taxable income](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-7.jpg)
Temporary Differences TIMMING DIFFERENCES A temporary difference corporation’s pretax financial income & taxable income that “originates” in one or more years and “reverses” in later years. 7
![HOW IS ADVANCED SUBSCRIPTION RECORDING ACCORDING TO Ø GAAP Ø IRS For recording expense HOW IS ADVANCED SUBSCRIPTION RECORDING ACCORDING TO: Ø GAAP? Ø IRS? For recording expense](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-8.jpg)
HOW IS ADVANCED SUBSCRIPTION RECORDING ACCORDING TO: Ø GAAP? Ø IRS? For recording expense we need GAAP reporting For Income tax payment we need IRS rule
![STOP THINK Is it possible for a company to have both deferred tax STOP & THINK! Is it possible for a company to have both deferred tax](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-9.jpg)
STOP & THINK! Is it possible for a company to have both deferred tax assets and deferred tax liability at the same time? If so, How? Give Example! Let’s Illustrate
![Examples Types of Temporary Differences Deferred tax assets result in deductible amounts in the Examples: Types of Temporary Differences Deferred tax assets result in deductible amounts in the](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-10.jpg)
Examples: Types of Temporary Differences Deferred tax assets result in deductible amounts in the future. Deferred tax liabilities result in taxable amounts in the future.
![Permanent Differences Some items of revenue and expense that a corporation reports for financial Permanent Differences Some items of revenue and expense that a corporation reports for financial](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-11.jpg)
Permanent Differences Some items of revenue and expense that a corporation reports for financial accounting purposes are never reported for income tax purposes. These permanent differences never reverse in a later accounting period. 11
![BookTax Differences Permanent Examples of permanent booktax differences Taxexempt state and local bond Book-Tax Differences – Permanent Examples of permanent book-tax differences Tax-exempt state and local bond](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-12.jpg)
Book-Tax Differences – Permanent Examples of permanent book-tax differences Tax-exempt state and local bond interest income Nondeductible expenses incurred to generate state and local bond interest income Life insurance proceeds (death benefits) 50% of meals and entertainment Political contributions Fines and penalties Bribes, kickbacks and illegal payments Dividends-received deduction: Certain deductions Professor Vedd
![CONT PART II CHANGES IN TAX RATES CONT… PART II CHANGES IN TAX RATES](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-13.jpg)
CONT… PART II CHANGES IN TAX RATES
![ACCOUNTING FOR INCOME TAXES CHAPTER 16 PART II INCOME TAXES DEFERED TAX WITH CHANGES ACCOUNTING FOR INCOME TAXES CHAPTER 16 PART II INCOME TAXES DEFERED TAX: WITH CHANGES](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-14.jpg)
ACCOUNTING FOR INCOME TAXES CHAPTER 16 PART II INCOME TAXES DEFERED TAX: WITH CHANGES IN ENACTED TAX RATES Professor Vedd
![Tax Rate Considerations Deferred tax assets and liabilities should be determined using the future Tax Rate Considerations Deferred tax assets and liabilities should be determined using the future](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-15.jpg)
Tax Rate Considerations Deferred tax assets and liabilities should be determined using the future tax rates, if known. The deferred tax asset or liability must be adjusted if a change in a tax law or rate occurs.
![Revision of Future Tax Rates When a change in tax rate is enacted its Revision of Future Tax Rates When a change in tax rate is enacted, its](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-16.jpg)
Revision of Future Tax Rates When a change in tax rate is enacted, its effect should be recorded immediately The effect is reported as an adjustment to tax expense in the period of change Changes in tax rates are treated just like any other change in estimate, prospectively See example following slide 16
![Net Operating Losses NOL Tax laws often allow a company to use tax NOLs Net Operating Losses (NOL) Tax laws often allow a company to use tax NOLs](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-17.jpg)
Net Operating Losses (NOL) Tax laws often allow a company to use tax NOLs to offset taxable income in earlier or subsequent periods. When used to offset earlier taxable income: l Called: operating loss carryback. l Result: tax refund. When used to offset future taxable income: l Called: operating loss carryforward. l Result: reduced tax payable.
![Accounting for Net Operating Losses Loss Carryback Back 2 years and forward 20 years Accounting for Net Operating Losses Loss Carryback Back 2 years and forward 20 years](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-18.jpg)
Accounting for Net Operating Losses Loss Carryback Back 2 years and forward 20 years Losses must be applied to earliest year first Loss Carryforward May elect to forgo loss carryback and Carryforward losses 20 years A company would most likely choose the carry-forward option for a net operating loss if the company expected higher tax rates in the future compared to the past 18
![Balance Sheet Classification Deferred tax assetsliabilities are classified as current or noncurrent based on Balance Sheet Classification Deferred tax assets/liabilities are classified as current or noncurrent based on](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-19.jpg)
Balance Sheet Classification Deferred tax assets/liabilities are classified as current or noncurrent based on the classification of the related asset or liability. Disclose the following: Total of all deferred tax liabilities. Total of all deferred tax assets. Total valuation allowance recognized. Net change in valuation account. Approximate tax effect of each type of temporary difference (and carryforward).
![INTERPERIODINTRAPERIOD INCOME TAX ALLOCATION INTERPERIOD is to recognize an asset or liability for the INTERPERIOD/INTRAPERIOD INCOME TAX ALLOCATION INTERPERIOD: is to recognize an asset or liability for the](https://slidetodoc.com/presentation_image_h/20b9ec1ee8053e4146432c1b4d284fea/image-20.jpg)
INTERPERIOD/INTRAPERIOD INCOME TAX ALLOCATION INTERPERIOD: is to recognize an asset or liability for the tax consequences of temporary differences that exist at the balance sheet date. INTRAPERIOD: The total income tax expense for a reporting period is allocated among the financial statement items that gave rise to the income tax expense. The following items should be reported net of their respective income tax effects: • Income (or loss) from continuing operations • Discontinued operations • Extraordinary items • Changes in accounting principle • Prior period adjustments (to the beginning retained earnings balance) 20
Loss contingency journal entry
Income tax expense
Fas 109 and fin 48
Chapter 2 income benefits and taxes
Chapter 23 understanding income and taxes
Journal entry for revaluation of assets
Tax shield
Financial accounting and accounting standards chapter 1
Chapter 14: taxes and government spending section 1
Foundationsu.com disc
Chapter 14 taxes and government spending
Chapter 2 financial statements taxes and cash flow
Chapter 14 taxes and government spending
How to calculate real gdp per capita
What is operating income
Ano ang gross national income
Income statement in financial accounting
Income accounting u of u
Fixed income accounting
Cost accounting income statement
Multi step income statement