CT18.1 (LO 1) Writing (Objectives and Principles for Accounting for Income Taxes) The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense. Instructions a. Explain the objectives of accounting for income taxes in general-purpose financial statements. b. Explain the basic principles that are applied in accounting for income taxes at the date of the finan- cial statements to meet the objectives discussed in (a). c. List the steps in the annual computation of deferred tax liabilities and assets.

CT18.1 (LO 1) Writing (Objectives and Principles for Accounting for Income Taxes) The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense. Instructions a. Explain the objectives of accounting for income taxes in general-purpose financial statements. b. Explain the basic principles that are applied in accounting for income taxes at the date of the finan- cial statements to meet the objectives discussed in (a). c. List the steps in the annual computation of deferred tax liabilities and assets.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Please describe the objectives behind FASB ASC Topic 740, Income Taxes, and the income tax provision…

Q: Pronghorn Enterprises Ltd., a private company following ASPE earned accounting income before taxes…

A: Calculation of current income tax expenseParticulars$Net profit before tax as per accounts $…

Q: It is talking about Hong Kong Tax, Special Business, Calculating Profit tax of financial…

A: The question is asking about the relationship between different sections of the Hong Kong Tax Law,…

Q: PLEASE ANSWER ALL QUESTIONS IN BOTH 1 AND 2 PLEASE. 1. Some accountants believe that deferred taxes…

A: Temporary differences are defined as differences between the carrying amount of assets and…

Q: Are there differences between financial reporting standards and income tax rules thatwill not cause…

A: Normally, business follow GAAP in preparing their financial statements in order to arrive at their…

Q: What is the main principle of tax-effect accounting as outlined in AASB 112/IAS

A: Answer: According to data - This report discusses the main principle of tax effect accounting and…

Q: All of the following are calculated on Form 990-PF, EXCEPT: Excise tax on investment income.…

A: It is the return of private foundation or Section 4947(a)(1) Trust Treated as Private Foundation.

Q: The following statements are true concerning the allowance method except: Oit does not always match…

A: The allowance approach is a form of bad debt accounting that involves the estimation of…

Q: True or False: The income a U.S. company reports to the IRS (i.e. to calculate taxes), could be…

A: The income in the income statement is different from those the tax authorities choose and pay taxes…

Q: Objective-type Question: According to the Accounting Tax Principle, when should taxes be recognized…

A: The accrual base of accounting records earnings and charges when they're earned or incurred, anyhow…

Q: Discuss how the provision for income taxes is computed and reflected in interim financial…

A: Interim financial statements are abbreviated financial reports that are prepared and issued at…

Q: deferred tax assets and deferred tax liabilities

A: The deferred tax assets and deferred tax liabilities arise due to the tax effect of timing…

Q: 7 How should deferred taxes be presented on the balance sheet? As current components of…

A: Deferred tax arises whenever there is a difference between the carrying amount of the…

Q: What is the taxable base for federal income taxes? a. Gross income b. Net worth c. Total assets d.…

A: Taxable base is the amount on which income taxes are calculated by applying the applicable rate.

Q: Schedule B - Include interest and dividends. Schedule 1 - Include additional income and adjustments.…

A: On Schedule B, you need to report the interest and dividends. In this case, the interest income from…

Q: It is talking about Hong Kong Tax, Special Business, Calculating Profit tax of financial…

A: The objective of the question is to understand the relationship between S.14, S.15(i), D7/84 and the…

Q: All of the following represent taxes commonly collected by businesses except: Oa. Employment…

A: All of the following represent taxes are commonly collected by business except Employment Insurance…

Q: One way to select the input screen for interest income reported on Form 1099-INT is for the Tax…

A: The time period Form 1099-INT refers to an Internal Revenue Service (IRS) tax shape this is utilized…

Q: Briefly explain the determination of temporary differences

A: Introduction MFRS 112: According to the MFRS 112 Amendments, businesses must pay for deferred tax on…

Q: Intraperiod tax allocation relates income tax expense to the items that affect the amount of tax. O…

A: Income tax is calculated on income of each year in total. Intraperiod means within one period.

Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

CT18.1 (LO 1) Writing (Objectives and Principles for Accounting for Income Taxes) The
amount of income taxes due to the government for a period of time is rarely the amount reported on the
income statement for that period as income tax expense.
Instructions
a. Explain the objectives of accounting for income taxes in general-purpose financial statements.
b. Explain the basic principles that are applied in accounting for income taxes at the date of the finan-
cial statements to meet the objectives discussed in (a).
c. List the steps in the annual computation of deferred tax liabilities and assets.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Basics about Accounting for Income taxes

VIEW

Step 2: Objectives of accounting for income taxes in general-purpose financial statements

VIEW

Step 3: Basic principles applied in accounting for income taxes at the date of the financial statements

VIEW

Step 4: Steps in the annual computation of deferred tax liabilities and assets

VIEW

Solution

VIEW

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Statements of procedures that affect the rights and obligations of taxpayers or the public in general with respect to the application of the tax laws or tax information which should be a matter of public knowledge are released as: a. Revenue Rulings b. Technical Advice Memoranda c. Private Letter Rulings d. None of the above
Choose the letter of the correct answer.
Long-term debt intended to be repaid from tax levies or special assessments is recorded in debt service funds. true false
Under IAS 1 an entity must present a statement of profit or loss and other comprehensive income. Which of the following statements is true in respect of the other comprehensive income section? 1. Items should be grouped into those that may subsequently be reclassified to profit or loss and those that will not subsequently be reclassified to profit or loss. 2. All items must be shown inclusive of income tax 3. Extraordinary items should be listed separately with details of the nature of the item disclosed in the notes. Please select the right answer. All of the above 1 and 2 only 2 only 1 only
When is an encumbrance recorded? What happens to this balance? How are encumbrances reported in government-wide financial statements?
How have the recent revenue recognition standards affected the book/ tax accounting
3 What is income tax payable? O A company's liability, based on profitability, that is paid in advance to the government O A payment to a company, based on profitability, that is paid in advance from the government A payment to a company, based on profitability, to be paid from the government O A company's liability, based on profitability, to be paid to the government
1. Under IFRS companies are required to provide a reconciliation between actual tax expense and the applicable tax rate. The purpose(s) of this reconciliation include I. Making better prediction of future cash flow. II. Predicating future cash flows for operating loss carryforwards. III. Assessing the composition of the net deferred income tax liability. IV. Assessing quality of earnings. Select one: a.I, II, III and IV. b.I, III, and IV only. c.I, II and IV only. d.I and IV only. 2. Under IFRS deferred tax assets are recognized for I. Deductible temporary differences. II. Deductible permanent differences. III. Operating loss carryforwards. IV. Operating loss carrybacks Select one: a.I and III only. b.I and IV only. c.II and III only. d.I, II, and III. 3. In determining whether to adjust a deferred tax asset, a company should Select one: a.pass a recognition threshold, after assuming that it will be audited by taxing authorities. b.take an aggressive approach…
The tax law refers to gross income, yet the term gross income is not found on Form 1040. Explain.
I. Review the adequacy of the withholding procedures. II. Determine the last remittance of withholding taxes made before the statement of financial position date. III. Follow up remittance subsequent to the statement of financial position date. Which of the following are usual audit procedures for withholding taxes payable? A. I, II, IIIB. I, IIC. I, IIID. II, III
1) What are the five steps to apply the core principles of revenue recognition, list them? What new accounting pronouncement outline these core steps? 2) What are the four disclosures required by U.S. GAAP relating to income taxes.
A22