Midterm Study Guide Liabilities

Midterm Study Guide Liabilities - Temporary difference o...

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Study Guide: Liabilities Contingencies: o Remote probability: Ignore o Reasonably possible: Footnote Analyst would want to include full amount in calculations o Probable: Footnote range Include low end of range on B/S Analyst would want to include full amount of range Deferred taxes: o Components of income tax expense: Current/ payable + deferred = total income tax benefit/ expense
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Unformatted text preview: Temporary difference o Effective tax rate: Compared to statutory tax rate, what is company actually paying? Permanent difference o Components of deferred tax liabilities and assets: We want liability to be growing and assets to be falling • Better tax benefits • Better cash flows...
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