Week 6 - Deferred Tax Flashcards
What is the Tax Base of an asset?
The tax base of an asset is the amount that will be deductible in future for tax purposes against any taxable economic benefits that will flow to the entity on the carrying amount of the asset.
What is the full deferral approach?
Full deferral accounts for the full tax effects of timing differences, i.e. tax is shown in the published accounts based on the full accounting profit and the element not immediately payable is recorded as a liability until reversal.
What is accounting profit?
Accounting profit is net profit or loss for a period before deducting tax expense.
What is taxable profit?
Taxable profit is the profit for a period, determined in accordance with the rules established by the taxation authorities, upon which income taxes are payable.
What is tax expense?
Tax expense is the aggregate amount included in the determination of net profit or loss for the period in respect of current tax and deferred tax.
What is current tax?
Current tax is the amount of income taxes payable in respect of taxable profit for a period.
What are deferred tax liabilities?
Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.
What are deferred tax assets?
Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of:
1 - deductible temporary differences
2 - the carry forward of unused tax losses
3 - the carry forward of unused tax credits
What are temporary differences?
Temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base.
What is a taxable temporary difference?
Taxable temporary differences are temporary differences that will result in taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.
What are deductible temporary differences?
Deductible temporary differences are temporary differences that will result in amounts that are deductible in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled. These lead to deferred tax assets.
What is a deferred tax asset?
A deferred tax asset represents the amount of income taxes recoverable in future periods in respect of:
1 - deductible temporary differences
2 - the carry forward of unused tax losses
3 - the carry forward of unused tax credits
What is the tax base of a liability?
The tax base of a liability is its carrying amount, less any amount that will be deductible for tax purposes in respect of that liability in future periods.
