Income+Taxes+Lesson+_3+completed

Income+Taxes+Lesson+_3+completed - IncomeTaxes Current...

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1 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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2 The amount reported is the tax calculated from the loss May be carried back three years, or forward for the next twenty years When applying the carry back, it is usually applied to the oldest available year first The benefit of a tax loss carryforward is recorded (i.e. booked) if it is more likely than not that taxable income will be earned in future periods to apply it against Tax Loss Carryback and  Tax Loss Carryback and  Carryforward Carryforward
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3 Tax Loss Carryback Tax Loss Carryback Refile prior year’s tax returns, reduce prior taxable incomes with current year’s loss Claim back taxes previously paid: Income Tax Refund Receivable xx Current Income Tax Benefit xx If loss still remains, carry it forward
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4 Tax Loss Carryforward Tax Loss Carryforward Can you recognize (book) the tax benefit of a loss carryforward? If more likely than not (i.e. probable) that benefit will be realized (i.e. company will generate taxable income in the future to apply loss against), then recognize tax benefit as an asset: Future Income Tax Asset xx Future Income Tax Benefit xx
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5 Tax Loss Carryforward (Cont’d) Tax Loss Carryforward (Cont’d) If future taxable income not likely (i.e. not likely that benefit will be realized), then do not record the tax benefit Instead, report existence of loss carryforward
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This note was uploaded on 12/16/2011 for the course ACTG 3P33 taught by Professor N-a during the Fall '08 term at Brock University.

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Income+Taxes+Lesson+_3+completed - IncomeTaxes Current...

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