28 Flashcards
deck 28
under GAAP, which approach is used to determine ITE?
A + L approach
does a DTA result in a P or L?
it results in a profit, unless there was a VA allowance
how do you calc effective TR?
ITE / pretax income
what items are subject to intraperiod IT allocation?
IDA + PUFER + AP change/AOCI
what is the primary obj. of acct for IT’s?
to recognize the amt of DTL and DTA reported for future tax consequences
what is the 2-step approach for uncertain tax positions?
*step 1: recog. of tax ben (would you win >50%)
… test failed = tax exp increased
*step 2: meas. of tax ben
(even if win, how much?)
…reflect amt of ult. settlement w/ IRS
what tax rate is used for TD compared to TI?
TI uses the CY TR, while TD uses enacted (future years) TR
*do not get tricked into using anticipated/proposed/unsigned rates for TD
how are changes in tax laws/rates treated?
treat as change in est. (prospective approach)
how is adj’d DTL/DTA calc’d?
(BB TD + CY TD)
* new enacted TR
= req’d EB
= req’d adj.
…req’d adj is the DTA/DTL reported on JE
how many years for CB and CF for NOL’s?
2 back and 20 forward
*NOL’s create def’d tax ben’s
what is the JE for NOL CB?
*no VA allow.
Dr: tax refund receivable
Cr: tax benefit (reduction of book loss)
…IT refund receivable is the IRS tax refund
JE for NOL CF’s?
*may req. VA allow.
Dr: DTA (gift cert.)
Cr: tax ben
how is max future tax savings and DTA VA calc’d?
*max future tax savings =
CF bal * future rate
*DTA VA =
CF bal beyond CY * future rate
…max savings - DTA VA
= net realizable DTA
is a DRD on TI PD or TD?
it is a PD for amt excluded
*taxable amt is the unexcluded portion (100-80/70%) and that will be the TD (DTL)
what is DRD?
- own 0-19% = 70% exclude
- own 20-80% = 80% exclude
- own over 80% = 100% excl.
what TR do we use for interim FS’s? (quarters)
we use the est’d effective TR for each quarter for the entire year
are DTL and DTA’s netted against each other? and what TR’s are used for them?
- yes, same jurisdiction under IFRS too
- we use enacted TR for the year the TD is expected to reverse
- do not net if not same tax-paying comp’s (like japan w/ china)
the tax ben. from an NOL CF that reduces current taxes payable is treated as:
income from cont. op’s
what should be disclosed in a Co’s FS’s related to def’d taxes?
- types and amt’s of existing TD’s
- nature and amt of each type of NOL and tax credit CF
*NOT PD’s
when does an artificial loss occur?
when SP < FV
- actual loss = SP - BV
- this type of loss is def’d and recog’d over life of lease (cap lease)
