Analysis of income taxes Flashcards
Reading 35
Taxable income
This income is subject to tax based on the tax return
Taxes payable
This is the tax liability caused by taxable income (also known as the current tax expense)
Income tax paid
This is the actual cash flow for income taxes, including payments or refunds from other years
Tax loss carryforward
This is a current or past loss that can be used to reduce taxable income (thus, tax payable) in the future (and can result in a deferred tax asset)
Tax base
This is the net amount of a asset or liability used for tax reporting purposes
Accounting profit
This is pretax financial income based on financial accounting standards (also known as income before tax and earnings before tax)
Income tax expense
This is the expense recognised in the income statement that includes taxes payable and changes in deferred tax liabilities and assets
Deferred tax liabilities
These are balance sheet amounts that result from an excess of income tax expenses over taxes payable that are expected to result in future cash outflows
Deferred tax assets
These are balance sheet amounts that result from an excess of taxes payable over income tax expenses that are expected to be recovered from future operations
Valuation allowance
This is the reduction of deferred tax assets based on the likelihood the assets will not be realised
Carrying value
This is the net balance sheet value of an asset or liability
Permanent difference
This is a difference between taxable income (tax return) and pretax income (income statement) that will not reverse in the future
Temporary difference
This is a difference between the tax base and the carrying value of an asset or liability that will result in either taxable amounts or deductible amounts in the future
