Scribd
Upload
17 views

Task 6

Uploaded by

Annisa Nabila Kanti
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
17 views

Task 6

Uploaded by

Annisa Nabila Kanti
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

1. What are the objectives of accounting for income taxes?

The objectives of accounting for income taxes are to recognize

a. The amount of taxes payable or refundable for the current year


b. Deferred tax liabilities and assets for the future tax consequences of events that have been
recognized in an enterprise's financial statements or tax returns.

2. Explain the differences between: 


a. Pretax financial income and taxable income 
Taxable income is the amount of income a company must pay taxes on, while
pre-tax financial income is the amount a company makes before taxes are factored in.
It's important for companies to present their pre-tax financial income to investors, as
this gives them a more accurate picture of how well the company has performed.
Companies sometimes include income on their financial statements that isn't part of
their taxable income so that investors can see that the income in question was indeed
earned.
b. Temporary difference and permanent difference 

Temporary differences occur whenever there is a difference between the tax


base and the carrying amount of assets and liabilities on the balance sheet. Permanent
differences are differences between the tax and financial reporting of revenue or
expense items which will not be reversed in the future.

c. Taxable temporary difference and deductible temporary differences

A deductible temporary difference is a temporary difference that will yield


amounts that can be deducted in the future when determining taxable profit or loss.
Taxable temporary difference is a temporary difference that will yield taxable amounts
in the future when determining taxable profit or loss.

d. Future taxable amounts and future deductible amounts 


Future taxable amounts increase taxable income and result in deferred tax
liabilities for financial reporting purposes; future deductible amounts decrease taxable
income and result in deferred tax assets for financial reporting purposes.
e. Deferred tax liability and deferred tax asset 
A deferred tax asset is an item on the balance sheet that results from
overpayment or advance payment of taxes. It is the opposite of a deferred tax liability,
which represents income taxes owed.
f. Originating temporary difference and reversing difference 
An originating temporary difference is the initial difference between the book
basis and the tax basis of an asset or liability. A reversing difference occurs when a
temporary difference that originated in prior periods is eliminated and the related tax
effect is removed from the tax account.
g. Current income tax expense and deferred income tax expense 
Total income tax expense equals current income tax obligation adjusted for the
effect of transfer of income tax between different periods i.e. deferred taxation.
Where deferred tax expense is negative for a period, current tax expense is lower
than current income tax payable

You might also like