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Flashcards in Deferred Taxes Deck (8):
1

GAAP says to recognize a revenue/expense in one period and tax laws say to recognize it in another

Example: Dividends from a subsidiary accounted for using the Equity Method - tax income but not book income

Deferred Taxes

2

Deduction will reduce future income taxes expense.

Deferred Taxes

3

Income will be taxable in a future period and will increase future tax expense

Deferred Taxes

4

The FUTURE enacted tax rate not the current one.

It is never discounted to present value.

Deferred Taxes

5

If it isprobable that not all of a Deferred Tax Asset (debit) will be realized then the Deferred Tax Asset account must be written down (credit) to reflect this

Deferred Taxes

6

They have no tax impact.

When calculating the total differences between book and tax income subtract the permanent differences from the total before applying a future enacted tax rate

Deferred Taxes

7

The sum of Net Changes in Deferred Tax Assets and Deferred Tax Liabilities

GAAP Method for calculating is theAsset and Liability Approach

Note: IFRS uses the Liability approach only

Deferred Taxes

8

Current Deferred Tax Assets and Liabilities will impact income tax expense within 12 months. All current amounts are netted and reported as a single amount on the Balance Sheet

Non-Current Deferred Tax Assets and Liabilities will impact income tax expense 12 months or more fromt he Balance Sheet Date. All non-current amounts are netted and reported as a single amount on the Balance Sheet

Deferred Taxes