Student Notes, Taxes(16)

Financial statement presentation financial statement

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Financial Statement Presentation Financial Statement Presentation Financial Statement Presentation Financial Statement Presentation An individual deferred tax liability or asset is classified as current or  noncurrent based on the classification of the related asset or liability for  financial reporting purposes. Companies should classify deferred tax accounts on the balance sheet in  two categories: one for the  net current amount , and one for the  net noncurrent amount .  The implication is that you NET the  deferred tax assets and liabilities on the B/S.  
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Chapter 19-29 Income Statement Presentation Financial Statement Presentation Financial Statement Presentation Financial Statement Presentation Financial Statement Presentation Companies should allocate income tax expense (or benefit) to continuing  operations, discontinued operations, extraordinary items, and prior period  adjustments.  Companies should disclose the significant components of income tax  expense attributable to continuing operations (current tax expense,  deferred tax expense, etc.). 
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Chapter 19-30 Steps for Income Tax Recognition (The Asset- Steps for Income Tax Recognition (The Asset- Liability Method) Liability Method) Steps for Income Tax Recognition (The Asset- Steps for Income Tax Recognition (The Asset- Liability Method) Liability Method) Companies apply the following basic principles:   (1) Recognize a current tax liability or asset for the estimated taxes payable or  refundable.  (2) Recognize a deferred tax liability or asset for the estimated future tax effects  attributable to temporary differences and carryforwards using enacted tax  rate.  (3) Base the measurement of current and deferred taxes on provisions of the  enacted tax law.  (4) Reduce the measurement of deferred tax assets, if necessary, by the amount of  any tax benefits that, companies do not expect to realize.
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Chapter 19-31 Income Taxes IAS 12 Overall, similar to US GAAP Differences Terminology: Recognition criteria Tax rate for calculation Presentation Application for Revalued PP&E
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Chapter 19-32 IAS 12 - Income Taxes Differences in Terminology Recognition Criteria Recognize asset if realization is probable for IFRS. For US GAAP, always recognize asset. Record valuation allowance if less than full realization is probable. Tax Rate used for Calculation: IFRS uses enacted or substantively enacted rates Defined as “virtually certain”. The remaining steps in the process cannot affect outcome. US GAAP uses enacted rates only
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Chapter 19-33 IAS 12 - Income Taxes Remaining Differences Presentation US GAAP classify as current or long-term based on underlying asset or liability.
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