Deck 5 Flashcards
Footnote disclosure in the financial statements for pensions do not require the inclusion of:
The difference in executive and non-executive plans.
Deferred taxes must be considered when recording:
Net Periodic Pension Costs and changes in pension plan funded status due to prior service costs, net gains and loses, and net transition assets and obligations.
Under IFRS, the following are included in AOCI:
Re-measurements of defined benefit liability or asset, including re-measurements from actuarial gains. They are not amortized to income statement. Prior Service Costs are not included in AOCI under IFRS.
Post retirement benefits are:
Accrued in a similar manner as pension benefits.
Attribution period begins
At the age the employee was hired and ends on the fully eligibility age, according to company policy,
Underfunded post-retirement plans report a current liability to the extent:
That the benefits payable in the next 12 months exceed the fair value of the plan assets. (Benefits Payable - FV of Assets = Current Liability). Remaining balance is non-current liability.
When depreciation for income (not asset basis) tax purposes exceeds depreciation for financial statement purposes:
Future taxable income will be greater than future accounting income, therefore there is a deferred tax liability.
Whenever income is recognized in the financial statement before it is reported as taxable income:
A deferred tax liability should be reported.
The reversal of temporary differences will result in:
Future deductible amounts because a deferred tax asset represents tax savings. Future tax savings will be realized in the form of future tax deductions that will lower the amount of future taxes owed.
Deferred taxes (temporary differences) are calculated with the:
Enacted tax rate for the period in which the item is expect to be paid or realized (aka reversed).
If book basis of an asset is greater than tax basis (resulting from different depreciation methods):
A deferred tax liability should be established.
A temporary difference arises in situations where:
Items of revenue or expenses enter into pretax GAAP financial income in a period before or after they enter into taxable income.
Revenues that hit the income statement before they hit the tax forms will result in:
Lower taxes owed now and higher taxes owed later. This temporary difference will result in a deferred tax liability.
A deferred tax asset results from:
A temporary timing difference between what is reported on the financials and what is reported as taxable income. When taxable income is less than financial statement income a deferred tax asset will be recorded.
Valuation allowances is:
A change in circumstance that results in a change in judgment concerning the potential realization of a deferred tax asset should be recognized in income from continuing operations for the period of the change.
