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 differencesincome/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 transactionshow 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.
