Under the current generally accepted accounting principles, which approach is used to determine income tax expense?
Asset and Liability Approach
Also known as the "Balance Sheet Approach"
Define "deferred income tax".
The amount of income tax expense that is not currently due.
Define "pretax accounting income".
Income before income tax for financial accounting purposes determined by applying GAAP.
Define "interperiod tax allocation".
The process of measuring and recognizing the total income tax consequences of transactions in the year.
Define "income tax liability".
The amount of income tax the firm must pay on taxable income for a year.
Define "income tax expense".
- The account reported in the income statement that measures the income tax cost for the year's transactions.
- It is the net sum of the income tax liability, net change in the deferred tax accounts.
Define "deferred income tax provision".
- The amount of income tax expense that is not currently due;
- Equals the net sum of the change in the deferred tax accounts.
Define "current income tax provision".
The amount of income taxes due for the year (same as income tax liability).
Define "taxable income".
Income before tax for tax purposes.
What is the calculation for
Total Tax Effects for a period?
Income Tax Expense or Benefit
+ Deferred Income Tax Expense of Benefit
= Current Tax Liability