ACTG 3120 Chapter Notes - Chapter 16: Deferred Tax, Tax Basis, Deferred Income
24 Feb 2017
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Provision for income tax: refers to either income tax expense or recovery. Recovery is generated when a company has a loss for tax purposes; the income statement entry for income tax may be a credit rather than a debit. May use the term provision for income tax expense and recovery. Short cut approach only works if the tax rate does not change from year to year. Interperiod tax allocation: allocating tax expense to an appropriate year regardless of when it is actually paid. things i do now will result in paying taxes later. Permanent difference: arises when an i/s element enters the computation of either taxable income or pre-tax accounting income, but will never enter the computation of the other, and therefore, is never reversible. E. g. golf club dues, capital gains, penalties, political contribution. Dividends received can corps from other can corps. Equity in earnings significantly influenced associate companies.
