simplified what are permenanet and temporary differences and do you add or subtract it Flashcards
Golf club dues
add
permanent difference
warranty expense
add
temporary difference
warranty costs paid
subtract
temporary difference
depreciation (amortization)
add
temporary difference
CCA
subtract
temporary difference
how do you calculate the tax basis for warranty
you don’t it is always zero
how do you calculate the accounting basis for warrnaty
use the T account
how do you calculate the tax basis for capital assets
CCA - take the original amount less accumulated CCA
how do you calculate the accounting basis for capital assets
Depreciation - original cost - accumulated depreciation
what account do we use for warranty or capital assets for journalizing purposes
DIT - warranty
DIT - capital assets
DIT = differed income tax
what account do you use for the income tax payable
income tax payable
what account do you use when you are having a refund of taxes
income tax receivable
DIT - Loss carry forward or (LCF)
what account do you use for the balance of items (plug account)
provision for income tax
how far can you carry back a loss
3 years
how far forward can you carry a loss
20 years
when deciding how far back to apply a loss what do you need to consider
- if we are going to have a loss in the next year, go back the 3 years for sure
- this is the usual method
- if we decide we want to look at what is the most beneficial (give us the most refund) we look at the tax rate. the highest tax rate is best
if you have a loss in that year do you calculate a taxable income
no, because you can’t have a tax payable of -. it can only be zero
can you decide how much CCA to use at any time
yes, if you have a loss you might not want to use any CCA
