MGAC02H3 Chapter 18: Chapter 18 Notes
Document Summary
Accounting income and taxable income y y y. Reversing and permanent differences y y y y. Summary of learning objectives: explain difference between accounting income and taxable income, and calculate taxable income and current income taxes. Accounting income is calculated in accordance with generally accepted accounting principles. Taxable income is calculated in accordance with prescribed tax legislation and regulations. Because tax legislation and gaap have different objectives, accounting income and taxable income often differ. To calculate taxable income, companies start with their accounting income and then add and deduct items to adjust the gaap measure of income to what is actually taxable and tax-deductible in the period. Current income tax expense and income taxes payable are determined by applying the current tax rate to taxable income: explain what a taxable temporary difference is, determine its amount, and calculate future income tax liabilities.
