Accounting for Temporary Differences in Taxable Income

Description

Although a majority of income and deduction items encountered by a business enterprise are treated identically for financial reporting and tax purposes, there are numerous items that are treated differently. They are known as book-tax differences and are classified as either temporary or permanent.

This course covers temporary differences, including:

• how to identify and account for temporary differences
  

  • income/expense book-tax difference relating to financial income that will be recognized in the future is known as a deductible temporary difference creating a deferred tax asset.

  • income/expense book-tax difference relating to taxable income that will be recognized in the future is known as a taxable temporary difference creating a deferred tax liability.

  • What to do when these items reverse in a future period.

• the balance sheet presentation of deferred tax assets and deferred tax liabilities arising from these transactions

• how to prepare the journal entry to record the income tax expense (also called the income tax provision) including the deferred tax benefit/liability due to book-tax differences.

What You Will Learn!

• Identify what a temporary difference is and recognize how it is computed.
• Identify what a deferred tax liability is and recognize how to compute the tax accrual for a temporary negative difference.
• Identify what a deferred tax asset is and recognize how to compute the tax accrual for a temporary positive difference.
• Recognize the proper financial statement presentation of temporary differences.
• Discover what is recorded in the Valuation Allowance Account and when it is used.
• Discover the proper financial statement presentation of temporary differences in the Tax Accrual footnote.
• Identify what an uncertain tax position is and recognize its effect on the tax accrual.

Who Should Attend!

• Anyone interested in finance, accounting or related fields.

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