Chapter 8 - Income taxes Flashcards

1
Q

Deferred Taxes

A

Arises because of Timing and temporary differences

They do not arise because of permanent differences

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2
Q

Deferred Tax examples

A

Difference in useful life of assets considered for acc and tax purposes

Business losses which can be carried forward and set off against taxable gains

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3
Q

Permanent Difference

A

Any expense which gets additional deduction or is not allowed as deduction

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4
Q

Deferred Tax Liability

A

The difference arising When the tax base of an asset is less than the book value

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5
Q

December 2006
Book Value = $550,000
Tax Value = $500,000

2006 Tax rate 25%
2007 Tax rate 30%

Deferred Tax?

A

$550,000 - $500,000
= $50,000 difference

Tax rate is the one expected to apply when the liability is settled (2007)

30% x $50,000 = $15,000
Deferred Tax Liability

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6
Q

Current Tax

A

The amount of income taxes payable in respect of the taxable profit for a period - IAS 12

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