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  • Accounting For Income Tax

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    This document discusses accounting for income taxes and summarizes: 1. Current tax expense is calculated by applying the tax percentage to accounting profits subject to tax. Deferred tax liabilities occur when the tax base is greater than accounting profits and deferred tax assets occur when the tax base is less than accounting profits. 2. Temporary differences between accounting and taxable income are identified and the deferred tax is calculated by applying the tax rate to these differences. 3. Net operating losses can be carried forward and result in deferred tax assets.

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    Accounting for Income Tax

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    This document discusses accounting for income taxes and summarizes: 1. Current tax expense is calculated by applying the tax percentage to accounting profits subject to tax. Deferred tax liabilities occur when the tax base is greater than accounting profits and deferred tax assets occur when the tax base is less than accounting profits. 2. Temporary differences between accounting and taxable income are identified and the deferred tax is calculated by applying the tax rate to these differences. 3. Net operating losses can be carried forward and result in deferred tax assets.

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    6 views1 page

    Accounting For Income Tax

    Uploaded by

    gummydummy5678
    This document discusses accounting for income taxes and summarizes: 1. Current tax expense is calculated by applying the tax percentage to accounting profits subject to tax. Deferred tax liabilities occur when the tax base is greater than accounting profits and deferred tax assets occur when the tax base is less than accounting profits. 2. Temporary differences between accounting and taxable income are identified and the deferred tax is calculated by applying the tax rate to these differences. 3. Net operating losses can be carried forward and result in deferred tax assets.

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    ACCOUNTING FOR INCOME TAX

    ① C AMT > TAX BASE


    FIN INC > TAX INC TTD * TAX % = DTL

    C AMT < TAX BASE


    FIN INC < TAX INC DTD * TAX % = DTA

    ②
    Pretax Income xx
    Non-deductible Exp xx
    Non-taxable Inc (xx)
    AcctgProfSubj2Tax xx * % = IncTaxExp / TotTaxExp

    Temp Diff:
    TAX ACCTG T-A % DTL / DTA
    ASSET + + (xx)
    TTD*% (xx) = DTL IF DTL > DTA = DefTxExp
    (LIAB) - - (xx)
    REV + + xx
    DTD*% xx = DTA IF DTL < DTA = DefTxBenefit
    (EXP) - - xx
    TAXABLE INCOME xx % CURRENT TAX EXP

    Ex:

    PRE TAX INC 7,000,000


    NON-DED EXP 0
    NON-TXBL INC 0
    ACCTG PROF SUBJ2TX 7,000,000 30% 2,100,000

    TAX ACCTG T-A % DTL DTA


    ASSET 0 1,000,000 (1,000,000) 30% (300,000)
    LIAB 0 (200,000) 200,000 30% 60,000
    TAXABLE INCOME 6,200,000 30% 1,860,000

    DEF TAX LIAB 300,000


    DEF TAX ASSET 60,000
    DEF TAX EXP 240,000

    ③ NOLCO ⇾ DTA

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