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Buổi 7 - Income Tax - Hedge Academy
Buổi 7 - Income Tax - Hedge Academy
Income Tax
Compiled by Hedge Academy (+84) 0869231510
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Hedge.Academy@gmail.com Skype: Khanhn1510@outlook.com.vn
Agenda
1. Learning outcome
2. Key Terminology and The Differences Between Accounting profit and
Taxable income
3. Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL).
4. How to calculate DTA, DTL
5. Effect of Tax Rate Change
6. Valuation for DTA
7. The Effect of DTA/DTL and Tax rate on Financial Statement and it’s
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disclosure
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1.● Learning outcome
describe the differences between accounting profit and taxable income, and define key
terms, including deferred tax assets, deferred tax liabilities, valuation allowance, taxes
payable, and income tax expense;
● explain how deferred tax liabilities and assets are created and the factors that determine
how a company’s deferred tax liabilities and assets should be treated for the purposes of
financial analysis;
● calculate the tax base of a company’s assets and liabilities;
● calculate income tax expense, income taxes payable, deferred tax assets, and deferred tax
liabilities, and calculate and interpret the adjustment to the financial statements related to
a change in the income tax rate;
● evaluate the impact of tax rate changes on a company’s financial statements and ratios;
● distinguish between temporary and permanent differences in pre-tax accounting income
and taxable income;
● describe the valuation allowance for deferred tax assets—when it is required and what
impact it has on financial statements;
● compare a company’s deferred tax items;
● analyze disclosures relating to deferred tax items and the effective tax rate reconciliation,
and explain how information included in these disclosures affects a company’s financial
statements and financial ratios;
● identify the key provisions of and differences between income tax accounting under 3
International Financial Reporting Standards (IFRS) and US generally accepted accounting
principles (GAAP).
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2. Key Terminology and the differences between
accounting profit and taxable income
Tax Return Terminology
● Tax losses from prior periods may offset future taxable income
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● Financial statement adjustments may not affect the tax return or may
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3. Deferred tax assets and Deferred tax liabilities
● Revenues (or gains) are recognized in IS before they are included on tax
return
● Expenses (or losses) are tax deductible before they are recognized in IS
To watch demonstration
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● In a case, where the change that leads to a deferred tax item is taken
directly to equity, the deferred tax item should also be taken directly
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to equity.
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7. The Effect of DTA/DTL and Tax rate on Financial
Statement and it’s disclosure
● A deferred tax liability results from using accelerated depreciation for
tax purposes and straight-line depreciation for the financial statements.
● Impairments result in DTA since the writedown is recognized
immediately in the income statement, but the deduction on the tax
return is generally not allowed until the asset is sold or disposed.
● Restructuring generates a deferred tax asset, but not deducted for tax
purposes until actually paid
● Post-employment benefits and deferred compensation are both
recognized for financial reporting when earned by the employee but not
deducted for tax purposes until actually paid.
● A deferred tax adjustment is made to stockholders’ equity to reflect the
future tax impact of unrealized gains or losses on available-for-sale 16
marketable securities that are taken directly to equity
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7. The Effect of DTA/DTL and Tax rate on Financial
Statement and it’s disclosure
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