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CHapter 17 to 23 notes with examples and charts.docx

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Chapter 17EPS for each income component must be reported under IFRS presented asEarnings per shareIncome from continuing operationsXXLoss from discontinued operationsXXNet incomexx If preferred shares areoNoncumulative deduct only declared dividendsoCumulative deduct only declared dividends for current year or if dividends undeclared deduct one years dividends stillDilutive effect of convertible securities measured by ifconverted methodoNet income adjusted for interest on convertible debt dividends on convertible preferred sharesDilutive effect of optionswarrants measured by treasury stock method or reverse treasury stockoTreasury stock method applies to written call optionsequivalents 2 assumptionsOptions assumed exercised at beginning of yearProceeds from exercise of options assumed to be used to buy back common sharesThe exercise price per share must be less than the market price per share for dilution to occuroReverse treasury stock method applies to written put optionsforwards 2 assumptionsEnough common shares issued at beginning of the year for the company to purchase shares under the option or forward contractProceeds from the share issue will be used to purchase shares under the option or forward contractThe exercise price per share must be greater than the market price per share for dilution to occurChapter 18 Permanent differences orecognized for financial accounting purposes but never for income tax Nontaxdeductible expenses eg fines golf dues expenses related to nontaxable revenueDividends from taxable Canadian corporationsoItems recognized for tax purposes but not for financial accounting purposesDepletion allowance of natural resources in excess of cost Temporary differences areoAccumulated timing differencesoThe difference between book value of an asset or liability and its tax base or basis1Taxable temporary differences ie will be added to accounting income in calculating taxable income in the future Deferred tax liabilities Future tax consequences of a taxable temporary differences2Deductible temporary differences ie will be deducted from accounting income in calculating taxable income in the futureDeferred tax assetsFuture tax consequences of a deductible temporary differenceIncome taxes under ASPEoThis method is called the future income taxes methodoRelated tax accounts are called future income tax assets future income tax liabilities and future income tax expenseIncome taxes under IFRSoThis method is called the temporary difference approachoRelated tax accounts are called deferred tax assets deferred tax liabilities and deferred tax expenseThe effect of future tax rate changes should be immediately recognized on all deferred tax accountsoRecorded as an adjustment to the deferred tax expensebenefit
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