Income Taxes

Question 1

Define current taxes payable

What is the JE?

Answer 1

tax liability for the CY based on the income tax act

Dr Current income tax exp
Cr income taxes payable - current

Question 2

Permanent Differences

Answer 2

a revenue, expense, gain or loss used in calculating either accounting income or taxable income but NEVER both - no accounting impact

Question 3

Temporary Differences

Answer 3

when the accounting treatment and tax treatment of an asset or liability differ over time, these differences will reverse:

Taxable difference: higher income tax paid in the future

Deductible Difference: less tax paid in the the future

Question 4

Deferred taxes

Answer 4

temporary differences in treatment of a transaction for accounting purposes versus tax purposes

Question 5

Deferred Tax Liability

Answer 5

increased taxes payable in the future

Question 6

Deferred Tax Asset

Answer 6

reduction in future income taxes

Question 7

Tax Payable Method

Answer 7

ASPE

only current income taxes recorded, deferred taxes are ignored