AC 312 Study Guide
***When visiting Prof. MacIver he said to do “Questions for review of key topics” (Q-Ch. - # questions) to study for conceptual questions on exam. ***
Ch 16 - Accounting for Income Taxes:
The objective of accounting for income taxes is to recognize a deferred tax liability or deferred tax asset for the tax consequences of amounts that will become taxable or deductible in future years as a result of transactions or events that already have occurred. Deferred tax assets result in deductible amounts in the future.
Deferred tax assets can result from (1) estimated expenses that are recognized in income statements when incurred but deducted on tax returns in later years when actually paid and (2) revenues that are taxed when collected but recognized in income statements in later years when actually earned.
Deferred tax liabilities result in taxable amounts in the future.
Note that deferred tax liabilities can arise from either (a) a revenue being reported on the tax return after the income statement or (b) an expense being reported on the tax return before the income statement.
LO1: Describe the types of temporary differences that cause deferred tax liabilities and determine the amounts needed to record periodic income taxes:
Temporary differences produce future taxable amounts when the taxable income will be increased relative to pretax accounting income in one or more future years. These produce deferred tax liabilities for the taxes to be paid on the future taxable amounts. Income tax expense for the year includes and amount for which payment (or receipt) is deferred in addition to the amount for which payment is due currently. The deferred amount is the change in the tax liability (or asset). (p. 875)
Temporary differences occur between pretax accounting income and taxable income and between the reported amount of an asset or liability in the financial statements and its tax basis.(The difference in the rules for computing between pre-tax
Ch 16 - Accounting for Income Taxes:
The objective of accounting for income taxes is to recognize a deferred tax liability or deferred tax asset for the tax consequences of amounts that will become taxable or deductible in future years as a result of transactions or events that already have occurred. Deferred tax assets result in deductible amounts in the future.
Deferred tax assets can result from (1) estimated expenses that are recognized in income statements when incurred but deducted on tax returns in later years when actually paid and (2) revenues that are taxed when collected but recognized in income statements in later years when actually earned.
Deferred tax liabilities result in taxable amounts in the future.
Note that deferred tax liabilities can arise from either (a) a revenue being reported on the tax return after the income statement or (b) an expense being reported on the tax return before the income statement.
LO1: Describe the types of temporary differences that cause deferred tax liabilities and determine the amounts needed to record periodic income taxes:
Temporary differences produce future taxable amounts when the taxable income will be increased relative to pretax accounting income in one or more future years. These produce deferred tax liabilities for the taxes to be paid on the future taxable amounts. Income tax expense for the year includes and amount for which payment (or receipt) is deferred in addition to the amount for which payment is due currently. The deferred amount is the change in the tax liability (or asset). (p. 875)
Temporary differences occur between pretax accounting income and taxable income and between the reported amount of an asset or liability in the financial statements and its tax basis.(The difference in the rules for computing between pre-tax