Analysis of Income Taxes

Question 1

Income tax expense

Answer 1

In Income statement. taxes payable (tax return) + changes in DTL - changes in DTA

Question 2

Tax terms for tax return

Answer 2

Taxable income
Taxes payable
Income tax paid
Tax loss carryforward
Tax base

Question 3

Tax terms for financial reporting

Answer 3

Accounting profit
Income tax expense
Deferred tax liability
Deferred tax asset
Valuation allowance
Carrying value

Question 4

Deferred tax liability

Answer 4

Tax expense > taxes payable (got taxed too little)

Question 5

Deferred tax asset

Answer 5

Tax expense < taxes payable (got taxed too much)

Question 6

Valuation allowance

Answer 6

Reduces DTA. Is based on the likelihood that the asset will not be realized. IFRS: show DTA adjusted for VA; US GAAP: full DTA shown

Question 7

Statuory rate

Answer 7

Corporate income tax rate in which the company is domiciled

Question 8

Effective tax rate

Answer 8

Income tax expense / pretax income

Question 9

Cash tax rate

Answer 9

Cash taxes paid / pretax income