Student Notes, Taxes(16)

What causes irs gaap what causes irs gaap what causes

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What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP
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Chapter 19-7 Revenues Expenses (S/L depreciation) Pretax financial income Income tax expense (40%) $130,000 30,000 $100,000 $40,000 $130,000 2018 30,000 $100,000 $40,000 $130,000 2019 30,000 $100,000 $40,000 $390,000 Total 90,000 $300,000 $120,000 GAAP Reporting GAAP Reporting GAAP Reporting GAAP Reporting Revenues Expenses (MACRS depreciation) Pretax financial income Income tax payable (40%) $130,000 2017 40,000 $90,000 $36,000 $130,000 2018 30,000 $100,000 $40,000 $130,000 2019 20,000 $110,000 $44,000 $390,000 Total 90,000 $300,000 $120,000 Tax Reporting Tax Reporting 2017 What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP
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Chapter 19-8 Income tax expense (GAAP) Income tax payable (IRS) Difference $40,000 36,000 $4,000 $40,000 2018 40,000 $0 $40,000 2019 44,000 $(4,000) $120,000 Total 120,000 $0 Comparison Comparison Comparison Comparison 2017 Year Reporting Requirement 2017 2018 2019 What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP
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Chapter 19-9 What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP What Causes IRS ≠ GAAP
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Chapter 19-10 Balance Sheet Assets: Liabilities: Equity: Income Statement Revenues: Expenses: Net income (loss) 2017 2017 Financial Reporting for 2017 Financial Reporting for 2017 Financial Reporting for 2017 Financial Reporting for 2017
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Chapter 19-11 A deferred tax asset works the same as a liability, only it represents  lower future taxes payable (because they were paid today).  What if… a company is facing a high likelihood of bankruptcy in the next few  years?  Valuation Allowance Valuation Allowance Valuation Allowance Valuation Allowance
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Chapter 19-12 Jennifer Capriati Corp. has a deferred tax asset balance of $150,000 at the end of  2006 due to a single cumulative temporary difference of $375,000.  At the end of  2007 this same temporary difference has increased to a cumulative amount of  $450,000.  Taxable income for 2007 is $820,000.  The tax rate is 40% for all  years. No valuation account is in existence at the end of 2006. Instructions Assuming that it is more likely than not that $30,000 of the deferred tax asset  will not be realized, prepare the journal entries required for 2007. Valuation Allowance Valuation Allowance Valuation Allowance Valuation Allowance
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Chapter 19-13 Valuation Allowance Valuation Allowance Valuation Allowance Valuation Allowance
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Chapter 19-14 Deferred Tax Asset—Valuation Allowance Balance Sheet Presentation Valuation Allowance Valuation Allowance Valuation Allowance Valuation Allowance So, if you were management and had lots of income in the current year,  what could you do?  
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Chapter 19-15 Temporary Differences Temporary Differences Temporary Differences Temporary Differences So far, we have only looked at difference that will reverse in the future.   What if there is a difference between tax and GAAP, but it is not  expected to ever reverse?  For example, what if a company received  $1000 in interest from municipal bonds?  When will this reverse itself  out?
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