Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Chapter 10, Problem 10.7AP
To determine
Concept Introduction:
Deferred tax arises out of the temporary difference between the tax income and accounting income.
When the difference results in reducing the tax payments in the future years, this generates
Permanent and temporary differences:
Permanent differences between the accounting income and tax income arise when the difference is not reversed in future years.For example taxes exempt from income tax which are included in accounting income result in permanent difference.
Temporary difference arises when there are only timing differences and the impact of which will be reversed in future years.
The amount of taxes by the company in the three given years
b
To determine
Concept Introduction:
Deferred tax Asset and liabilities:
Deferred tax arises out of the temporary difference between the tax income and accounting income.
When the difference results in reducing the tax payments in the future years, this generates deferred tax assets. However, if the differences result in increasing the future tax payments, deferred tax liability is generated.
Permanent and temporary differences:
Permanent differences between the accounting income and tax income arise when the difference is not reversed in future years.For example, taxes exempt from income tax which are included in accounting income result in permanent difference.
Temporary difference arises when there are only timing differences and the impact of which will be reversed in future years.
The balance in deferred tax at the end of each year.
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Financial Accounting: The Impact on Decision Makers
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