23: Taxes Flashcards
Income tax expense is recorded on?
Financial reports
Taxes payable is records the value from the?
Tax returns
The taxes a company must pay in the immediate future are
taxes payable
Using the straight-line method of depreciation for reporting purposes and accelerated depreciation for tax purposes would most likely result in a
temporary difference
When accounting standards require an asset to be expensed immediately but tax rules require the item to be capitalized and amortized, the company will most likely record
deferred tax asset
A company incurs a capital expenditure that may be amortized over five years for accounting purposes, but over four years for tax purposes. The company will most likely record
deferred tax liability
the income based upon IRS rules that determines taxes due and is used for tax reporting
taxable income
income tax payable
A temporary difference between pretax income reported in a firm’s financial statements and taxable income the firm reports to the tax authorities results in
deferred tax item
The net taxable loss that can be used to reduce taxable income in the future
tax loss carryforward
Reserve against deferred tax assets based on the likelihood that those assets will not be realized
Valuation allowance
Reflect the difference in tax expense (reporting) and taxes payable (tax return) that are expected to be recovered from future operations
Deferred tax assets
If timing differences that give rise to a deferred tax liability are not expected to reverse, then the deferred tax:
should be considered an increase in equity
US GAAP prohibits the revaluation of _____, which is the source of differences in income tax expense for GAAP and IFRS
PPE
The deferred tax liability should be excluded from both debt and equity when both _____ and _____ resulting from the reversals of temporary differences are uncertain
the amounts and timing of tax payments
When DTA > DTL, and the tax rate increases, what happens to income tax expense?
An increase in tax rate will increase both DTAs and DTLs, but since the DTA > DTL the net effect for an increase in tax rate will decrease tax expense
