Management and Organizational Studies 3361A/B Lecture Notes - Lecture 7: Life Insurance, Financial Statement, Deferred Tax

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3361A/B
• Professor: Michelle Loveland

Document Summary

Permanent differences - items reported for accounting purposes but not for tax purposes (or vice versa) You do deduct professional associations for accounting, but not for tax. Life insurance is not deducted for tax purposes because it"s not income to the company, but it is expensed for accounting. For meals and entertainment you deduct 50% because there is a personal aspect of you enjoying that expense. Timing/reversible differences - accounting items that enter into the computation of taxable income, but does so in a different period than recognized for financial reporting. The amount of cca that goes down, can be off time from the depreciation, but eventually do even out. Look at your reconciliation to find the timing differences. Temporary differences - difference between book value of an asset/liability and its tax value (basis: originates in one/more periods, and reverses in one/more subsequent periods, deductible temporary difference: results in future taxable income being less than accounting income.