This preview shows page 1. Sign up to view the full content.
Unformatted text preview: eferred income taxes (in this case it is a debit) 16,231
Current taxes payable (or Income taxes payable)
127,791 Tax note Cheat Sheet – Tables 2 and 3
One table gives you the causes (e.g., differences in depreciation) that gave rise to the deferred tax asset/liability on the balance sheet. Another table (which is not always included) gives you the causes of the flow or entry to the deferred tax account during the year. Remember the following for temporary differences. A deferred tax debit entry (i.e., increase in asset or decrease in liability) arises when taxable income is greater than GAAP pretax income for the period (i.e., less revenue or more expense has been recorded for GAAP purposes). Therefore, a deferred tax liability associated with depreciation implies that the firm has recorded less depreciation expense for GAAP purposes than for tax purposes since the beginning of time. A decrease in that liability position over a single period implies that, for that period, the firm recorded more depreciation expense for GAAP purposes than for tax purposes (i.e., the liability position reversed during the period). Tax note Cheat Sheet – Tables 2 and 3 (Cont)
A deferred tax credit entry (i.e., decrease in asset or increase in liability) arises when taxable income is less than GAAP pretax income for the pe...
View Full Document
- Fall '14