CCH Learning Center

Description:

The tax consequences of many transactions recognized in financial statements are included in determining income taxes currently payable in the same accounting period. Sometimes, however, tax laws differ from the recognition and measurement requirements of financial reporting standards.

Differences that arise between the tax bases of assets or liabilities and their reported amounts in the financial statements that will turn around in the future are called temporary differences and they give rise to deferred tax assets and liabilities.

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and the deferred tax liabilities and assets that result from future tax consequences of events that have been recognized in the enterprise’s financial statements or tax returns.

GAAP for accounting for income taxes is included in ASC Topic 740, Income Taxes.

This course attempts to distill the complex provisions of ASC Topic 740 into a succinct guide for the most commonly seen practice situations. It explains the theory of how to differentiate the temporary differences that give rise to deferred income taxes, as well as how to calculate, record, and display them.

Upon completion of this chapter, the professional will be able to:

• Describe the scope of FASB ASC Topic 740

• Apply the liability method of accounting for income taxes

• Differentiate taxable temporary differences from deductible ones

• Recognize and measure deferred tax assets and liabilities

• Analyze how to present temporary differences in financial statements

• Identify disclosures required under FASB ASC Topic 740