AC2101 S1 2014 Seminar 13 & 14 Deferred Tax (Anil)

AC2101 S1 2014 Seminar 13 & 14 Deferred Tax (Anil) -...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
1 AC2101 – Accounting Recognition and Measurement Anil J N Shukla Adjunct Associate Professor Semester’1’2013-14’ presented by Seminar 13 & 14 Deferred Taxes I & II 1. What’is’“taxation”?’ 2. Development’of’the’accounting’standards’for’taxation.’ 3. Understand’the’concepts’of’permanent’and’temporary’diFerences’ 4. Understand’the’relationship’between’current’payable/receivable’vs.’ deferred’tax’liability/asset’ 5. Balance’sheet’liability’approach’to’DT’accounting’ § Asset’&’liability:’Carrying’Amount’vs.’Tax’Base’ § Taxable’TD’vs.’Deductible’TD’&’their’DT’implications’ § 2’basic’principles’underlying’B/S’liability’approach’ § Main’sources’of’temporary’diFerences’ 6. Tax’loss’carry’back’&’carry’forward’ 7. DT’Measurement,’Presentation’and’Disclosure’Issues’ Seminars’12’-’15’Agenda’ 2’
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 1. Concept’of’accrual’accounting’ 2. Matching’principle’ 3. Recovery(settlement)’of’asset(liability)’changes’ future’tax’payable’ 4. Underlying’transaction/event’ 5. All’of’the’above’ 6. None’of’the’above’ 3 Clicker’Question’ Deferred’tax’accounting’is’required’ because’of…’ * Recall’from’earlier,’taxable’income’is’≠’accounting’income.’This’is’ because’of:’ * Permanent ’diFerences’ * Temporary ’diFerences’ * Permanent ’diFerences’arise’from’diFerent’de±nitions’of’revenue’and’ expenses’between’accounting’standards’and’tax’rules.’Some’ examples’include:’ * Accounting’Revenue’ exempted from’income’tax’(e.g.’tax-exempt’interest’ income)’ * Accounting’Expenses’ disallowed for’income’tax’deduction’(e.g.’±nes’and’ penalties)’ 4 Permanent’and’Temporary’ DiFerences’
Background image of page 2
3 * What’about’ temporary’diferences’(“TD”) ?’ * What’gives’rise’to’a’TD’in’the’case’oF’entity’AA’Ltd’in’the’ earlier’seminar?’ 5 Permanent’and’Temporary’ Diferences’ * ±irst’year’oF’operation’begins’on’1.1.20X1’ * Bought’a’machine’that’same’day’and’the’cost’oF’machine:’ $100K’ * Accounting:’Straight-line’depreciation’over’4’yrs’ * Tax:’Capital’allowance’~’$40K,’$30K,’$25K,’$5K’ * Sales’revenue’in’20X1,’20X2,’20X3’and’20X4:’$200K’per’year’ * Tax’rate:’40%’ * Assuming’no’other’expenses,’accounting’pro²t’beFore’taxation’ For’20X1,’20X2,’20X3’and’20X4:’$175k’per’year’ Recall:’CASE’O±’ENTITY’-’AA’Ltd’ 6’
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 * What’about’ temporary’diferences’(“TD”) ?’ * What’gives’rise’to’a’TD’in’the’case’oF’entity’AA’Ltd’in’the’ earlier’seminar?’ * Diference’between’the’accounting’treatment’oF’ depreciation’and’tax’treatment’oF’capital’allowance’oF’the’ machine’ *
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 23

AC2101 S1 2014 Seminar 13 & 14 Deferred Tax (Anil) -...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online