ACCT3102 Study Guide - Midterm Guide: Deferred Tax, Deferred Income, Book Value
Document Summary
Lecture 3 accounting for income tax: based on requirements of accounting regulations. Taxable income =(cid:1827)(cid:1871)(cid:1871)(cid:1857)(cid:1871)(cid:1871)(cid:1853)(cid:1854)(cid:1864)(cid:1857) (cid:1861)(cid:1866)(cid:1855)(cid:1867)(cid:1865)(cid:1857) (cid:1853)(cid:1864)(cid:1864)(cid:1867)(cid:1875)(cid:1853)(cid:1854)(cid:1864)(cid:1857) (cid:1856)(cid:1857)(cid:1856)(cid:1873)(cid:1855)(cid:1872)(cid:1861)(cid:1867)(cid:1866)(cid:1871: based on income tax assessment act (1997, often follows cash flows of transactions and events. Essentially two ways to account for income tax expense: (1) tax payable method: recognize income tax expense as the amount expected to be payable during the year (i. e. based on assessable income and allowable deductions) x. *in practice may use this method is effect of aasb 112 is (cid:374)ot (cid:858)(cid:373)aterial(cid:859: criticisms of tax payable method: x. Changes in profit after tax may not be caused by changes in performance but by vagaries of the income tax legislation (results in more volatile after-tax profits: advantages of tax payable method: Balance sheet method: permanent differences: arise when amounts recognized as part of accounting profit are not recognized as part of taxable profit (or vice versa)
