Income+Taxes+Lesson+_1

Income+Taxes+Lesson+_1 - Chapter 18 IncomeTaxes IncomeTaxes...

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    Chapter 18 Chapter 18                 Income Taxes Income Taxes
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2 Income Taxes Income Taxes Current Current Income Income Taxes Taxes •Accounting income and taxable income •Calculation of taxable income •Calculation of current income taxes Income Tax Loss Income Tax Loss Carryover Benefits Carryover Benefits •Introduction to tax losses •Loss carryback illustrated •Loss carryforward illustrated •Carryforward with valuation allowance •Review of future income tax asset account Future/Deferred Future/Deferred Income Taxes Income Taxes •Tax basis •Future income tax liabilities •Future income tax assets •Income tax accounting objectives •Multiple differences illustrated •Tax rate considerations Presentation, Presentation, Disclosure, and Disclosure, and Analysis Analysis •Balance sheet presentation •Income and other statement presentation •Disclosure requirements •Analysis •Outstanding conceptual questions IFRS / IFRS / Private Private Entity GAAP Entity GAAP Comparison Comparison •Comparison chart •Looking ahead
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3 Fundamentals Fundamentals Accounting income (per GAAP) ≠ Taxable income (per Income Tax Act) Accounting income → Income tax expense (current and future) Taxable income → Income tax payable and current income tax expense Income tax expense ≠ Income tax payable
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4 Accounting Income and  Accounting Income and  Taxable Income: Taxable Income: Reconciliation of Accounting Income and Taxable Income: Accounting income ± differences = Taxable income Taxable income × current tax rate = taxes payable and current income tax expense
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5 Future Tax Liability Example Future Tax Liability Example Chelsea Inc. - 2010 Chelsea Inc. - 2010 Accounting Tax Revenue $130,000 $100,000 Expenses 60,000 60,000 Income $ 70,000 $ 40,000 Tax @ 40% $ 28,000 $ 16,000
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6 Future Tax Liability Example Future Tax Liability Example Chelsea Inc.  Chelsea Inc.  2010 2011 Accounting Income $70,000 $70,000 Adjust for revenue taxable in future period (30,000) 20,000 Taxable Income $ 40,000 $ 90,000 Tax payable @ 40% $ 16,000 $ 36,000 2012 $70,000 10,000 $ 80,000 $ 32,000
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7 Permanent, Timing, and  Permanent, Timing, and  Temporary Differences Temporary Differences Taxable income is determined by starting with accounting income and adjusting it for permanent and reversible (or timing) differences in the year
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Income+Taxes+Lesson+_1 - Chapter 18 IncomeTaxes IncomeTaxes...

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