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39 Cards in this Set
- Front
- Back
the amount used to compute income tax payable
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taxable income
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for tax purposes companies use a _____for reporting revenues
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modified cash basis
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in cases where taxes will be lower in the future because accounting differences this is called
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a deferred tax asset
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in cases where taxes will be higher in the future because accounting differences this is called
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a deferred tax liability
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the difference between teh tax basis of an asset and its book amount
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temporary difference
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the deferred tax conseqences attributable to taxable temporary differences
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deferred tax liability
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Income tax expense has these components
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deferred tax expense
current tax expense |
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Companies credit taxes due and payable to
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Income tax payable
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Companies credit the increase in deferred toaxes to
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Deferred tax liability
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The objectives of accounting for income taxes are
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to recognize the amount of taxes payable or refundable for the current year
to recognize deferred tasx liabilities and assets for the futre tax consequenses of events already recognized in teh financial statements or tax returns |
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When a company does not expect to realize a favoable tax benefit for a portion of the deductivle temporary difference it must
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establish a fvaluation allowance to recognized the reduction in the carrying amount of the deferred tax asset
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The entry to recognize the valuation allowance is
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debit income tax expense
credit allowance to reduce deferred tax asset to expected realizable value |
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When adjusting the allowance account at the end of the period, increases in teh deferred tax asset will have teh following entries
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debit allowance to reduce deferred tax asset to expected realizable value
credit income tax expense |
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A company ___ an increase in a deferred tax liablity to income tax payable and ____ an increase in a deferred tax asset
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adds, subtracts
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the formula used to compute income tax expense
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Income tax payable or refundable +/- Change in deferred income taxes = Total Income tax expense or benefit
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A company should report Current and Deferred income tax on the income statement
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separately
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deductions or credits that cannot be utilized on the tax return during a year and that may be carried back to reduce taxable income or taxes paid in a prior year.
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carry backs
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An ________ is an excess of tax deductions over gross income in a year.
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operating loss carryback
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A tax credit carry back is the amount by which tax credtis available for utilization exceed statutory limitations
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operating loss carryback
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A ___________ is the amount by which tax credtis available for utilization exceed statutory limitations
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tax credit carry back
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deductions or credits taht cannot be utilized on the tax return during a year and that may be carried forward to reduce taxable income or taxes payable in a future year
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carryforwards
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the amount of income taxes paid or payable for a year as determined by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues for that year
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CURRENT TAX EXPENSE
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temporary differences that result in deductible amounts in future years when recovering or settling the related asset or liability, respectively
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deductivle temporary difference
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teh deferred tax conseqences attributable to deductivle temporary differences and carryforwards
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deferred tax asset
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the future effects on income taxes as measured by the enacted tax rate and provisions of the enacted tax law resulting from temporary differnces and carryforwardds at the end of the current year
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deferred tax consequences
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the change during the year in a company's deferred tax liabilities and assets
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deferred tax expense
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the deferred tax consequences attributable to taxable temporary differences
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deferred tax asset
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the future effects on income taxes as measured by the the enacted tax rate an dprovisions of the enacted tax law resulting from temporary differences and carryforwards at the end of the current year
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deferred tax consequences
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the change during the year in a company's deferred tax liabilities and assets
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deferred tax benefits
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domestic and foreign federal state and local taxes based on income
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income taxes
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the sum of current tax expense (benefit) and deferred tax expense (benefit)
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income tax expense (benefit)
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The excess of tasxable revenues over tax deductible expenses and exemptions for the year as defined by the governmental taxing authority
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taxable income
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temporary differences that result in taxable amounts in future years when recovering or settling the related asset or liability, respectively
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taxable temporary differenc
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an action that meets certain critera and that a company implements to realize a tax benefit for an operating loss or tax credit arryforward before it expires. Companies consider tax planning strategies when assessing the need for and amount of a valuation allowance for deferred tax assets
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tax-planning strategy
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a differenc between the tax basis of an asset or liabiliy and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when recovering or settling the reported amount of the asset or liability, respectively
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temporary difference
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the portion of a deferred tax asset for which it is more likely than not that a company will not realize a tax benefit.
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valuation allowance
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since permanent differences in taxable income and pretax financial income affect only the period in which they occur, companies recognize
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no deferred tax consequences
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What is the GAAP based tax rate
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TAX EXPENSE/PRETAX INCOME
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What is the Effective Tax rate
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TAX EXPENSE/PRETAX INCOME
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