Chapter 19- Accounting For Income Taxes Flashcards
All deferred tax balances appearing on the balance sheet must be…
Classified as a non current asset!
Taxable Income
Indicates amount used to compute income taxes payable. Measured by the IRS ( tax code). Income taxes provide money to support government operations.
Pretax financial income
Income before taxes, determined by gaap mostly for book purposes. Income tax expense
What is income tax expense?
40%(Revenues- Expenses)
Revenues - Expenses =?
Pretax financial income
Income tax expense
Pretax income x tax rate
Income tax payable
Taxes due within one year
Temporary difference
Difference between tax basis of an asset or liability and it’s reported (carrying or book value) amount in financial statements
Taxable amounts vs deductible amounts
Taxable amounts increase taxable income in future years while deductible amounts decrease taxable income in future years
For expenses or losses compute…
Book amount- tax amount
For revenues or gains compute
Tax amount - book amount
Deferred tax liability
Increase in taxes payable in future years as a result of taxable temporary differences existing at the end of the current year
