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Flashcards in Accounting for Income Taxes Deck (17):
1

What are the 2 differences between pretax GAAP financial income and taxable income?

Permanent differences and temporary differences

2

What does permanent differences affect?

Current tax computation

3

What does temporary differences affect?

Deferred tax computation

4

What method is required by GAAP for comprehensive allocation?

Asset and liability method(Balance Sheet Approach)

5

Total income tax expense or benefit for the year is the sum of?

Current income tax expense/benefit and deferred income tax/benefit

6

Current income tax is equal to?

Income taxes payable or refundable for the current year

7

Deferred income tax expense/benefit is equal to?

The change in deferred tax liability or asset account on the balance sheet from the beginning of the current year to the end of the current year

8

Deferred taxes are requred for what type of difference?

Temporary difference

9

What develops when taxable income comes later?

Future tax liability

10

What develops when taxable income comes first?

Prepaid tax benefit

11

What develops when tax deductions come later?

Future tax benefit

12

What develops when tax deductions come first?

Future tax liability

13

How can a deferred tax liability be distinguished?

Future tax accounting income > future financial accounting income

14

How can a deferred tax asset be distinguished?

Future tax accounting income < future financial accounting income

15

How does deferred tax assets arise?

Amounts of taxes paid in the current period exceeds the amount of income tax expense in the current period

16

How is a valuation allowance recognized?

If it is more likely than not that part or all of the deferred tax asset will not be realized

17

Are valuation allowances permitted under IFRS?

No