Transaction - Accounting for Income Taxes

Question 1

What deferred taxes should be disclosed in financial statements?

Answer 1

Existing temporary differences, nature and amount of each operating loss and tax credit carry forward.

Question 2

Should DTA and DTL be deducted by tax laws and tax rates?

Answer 2

Yes and Yes

Question 3

What does GAAP provide income tax guidance on?

Answer 3

Derecognition, classification, interest and penalties, accounting interim periods, disclosure, and transitions related to uncertain tax provisions.

Question 4

Income tax expense or benefit for the year should be allocated among?

Answer 4

Continuing operations, discontinued operations, extraordinary items, prior period adjustment items or charges to shareholders equity, changes in accounting principles, and changes in market values of marketable equity securities classified as noncurrent assets.

Question 5

Permanent Differences for GAAP but not for Taxable Income (tax exempt)

Answer 5

City/State/County Municipal Bond Interest (not federal) including interest expense obtain tax exempt income like muni bonds, Life Insurance income proceeds and premium paid on key officers/employees (principal Officers), fines/expenses for law violations, and federal income taxes.

Question 6

Permanent Differences for Taxable Income but not for GAAP

Answer 6

Dividend received deductions for U.S. Companies, percentage depletion of natural resources in excess of cost.