Chapter 17: Accounting for Income Taxes

Chapter 17: Accounting for Income Taxes

1. Deferred tax asset

   • Amount of future income taxes refundable

2. Deferred tax liability

   • Amount of future income taxes payable

3. Total income tax provision = Current income tax expense (benefit) + Deferred income tax expense (benefit)

4. Taxable temporary difference

   • Arises when the financial reporting (book) basis of an asset exceeds its corresponding tax basis
     • Arises when the financial reporting (book) basis of a liability is less than its corresponding tax basis

5. Deductible temporary differences

   • Arises when revenues or gains are taxable BEFORE they are recognized in net income
     • Arises when expenses or losses are deductible on the tax return AFTER they reduce net income