BU397 Chapter Notes - Chapter 18: Taxation In Canada, Disclose, Pys
Document Summary
Company considers tax rates on profits when deciding where to set up operations corporate income taxes has most negative effect on gross domestic product per capita. Current year"s pre-tax income on income statement and company"s taxable income usually differ. Accounting income: income before taxes; income for financial reporting purposes; accounting profit; pre-tax. Taxable income: amount on which income tax payable is calculated; income for tax purposes (taxable profit) Companies prepare schedule that begins with accounting income and adjust this amount for each area of difference between it and taxable income: Reversing and permanent differences: revenues or gains are taxable after they"re recognized in accounting income: Sale may be recorded in current accounting period with dr to receivable and cr to revenue, but revenue may not be included in taxable income until future year when receivable is actually collected in cash. Gain on sale or holding gains may not be taxable until they"ve been realized (received in cash)
