Ch .23 Income Taxes

Question 1

What are the steps to calculate deferred taxes?

Answer 1

Step 1 - determine temporary differences (assets and liabilities that different for accounting and tax purposes)

Step 2 - Calculate balances of deferred tax - multiply the total of temporary differences by tax rate substantively enacted – positive balance - deferred tax asset, negative balance - deferred tax liability

Question 2

What are some common temporary differences between accounting and tax?

Answer 2

Warranty liability, leases, decommissioning provision, lawsuit accruals, PPE (depreciation vs CCA), deferred development costs, accrued liabilities (some), investments classified as PVTPL and FVTOCI