FRA Taxes Flashcards
Accounting Profit
Income as reported on the income statement, in accordance with prevailing accounting standards, before the provisions for income tax expense
Carrying Amount
The amount as which an asset or liability is valued according to accounting principles
Deductible temporary differences
Temporary differences that result in a reduction of or reduction from taxable income in a future period when the balance sheet item is recovered or settled
Deferred tax assets
A b/s asset that arises when an excess amount is paid for income taxes relative to accounting profit. The taxable income is higher than accounting profit and income tax payable exceeds tax expense. The company expects to recover the difference during the course of future operations when tax expense exceeds income tax payable
Deferred tax liabilities
A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminate the liability over the course of future operations wheb income tax payable exceeds tax expense
Income tax paid
The actual amount paid for income taxes in the period; not a provision, but the actual cash outflow.
Income tax payable
The income tax owed by the company on the basis of taxable income
Permanent differences
Differences between tax and financial reporting of revenue (expenses) are that will not be reversed at some future date. These result in a difference between the companies effective tax rate and statuatory tax rate and do not result in a deferred tax item
Tax base
The amount at which an asset or liability is valued for tax purposes
Tax expense
An aggregate of an entities income tax payable (or recoverable in the case of a tax benefit) and any changes in deferred tax assets and liabilities. It is essentially the income tax payable or recoverable if these had been determined based on accounting profit rather than taxable income
Tax loss carry forward
A taxable loss in the current period that may be used to reduce future taxable income
Taxable income
The portion of an entitys income that is subject to income taxes under the tax laws of its jurisdiction
Taxable temporary differences
Temporary differences that result in a taxable amount in a future period when determining the taxable profit as the balance sheet item is recovered or settled
Valuation allowance
A reserve created against deferred tax assets, based on the likelihood of realizing the deferred tax assets in future accounting periods
