I Analyze disclousres relating to deferred tax items and the effective tax rate reconciliation, and explain how information included in these disclousres affects a companys financial statements and financnail ratios.

Question 1

Analyzing the effective tax rate reconciliation

Answer 1

Income tax expense may differ from the amount based on the statutory tax rate (Trate of the jurisdiction where the firm operates)

When est. future earnings and CF’s, the analyst should understand each element of the reconciliation, including its relative impact, how it has changed wit time, and how it is likely to change in the future.

Analyzing trends in tax rates - include only reconcilation items that are continupus.

Question 2

Analyzing the effective tax rate reconciliation

Answer 2

Income tax expense may differ from the amount based on the statutory tax rate (Trate of the jurisdiction where the firm operates)

When est. future earnings and CF’s, the analyst should understand each element of the reconciliation, including its relative impact, how it has changed wit time, and how it is likely to change in the future.

Analyzing trends in tax rates - include only reconcilation items that are continupus.

Continuous; Different rates in different countries, tax empt income, non deductible expenses