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IT Accounting under IFRS and US GAAP

Even though IFRS and US GAAP have similar treatment of income tax issues, there are some differences. These differences are summarized below:   US GAAP IFRS Recognition of deferred tax assets Recognized in full (except for certain outside basis differences), but...

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Disclosures for Deferred Tax Items

The following information about the deferred tax items is usually disclosed: Total of all deferred tax liabilities ($48 million in our Illustration 16-10 Note). Total of all deferred tax assets ($26 million in our Illustration 16-10 Note). Total valuation allowance...

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Valuation Allowance for Deferred Tax Assets

A deferred tax asset is created due to a temporary difference between accounting profits and taxable income and the company expects this difference to reverse in the future with sufficient future taxable income. However, if there is not sufficient taxable income in...

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Example of a Deferred Tax Liability

We have the following information about an asset of a company. Original cost: $1,500,000 Useful life of the asset: 3 years Salvage value: $0 Depreciation for accounting purpose: $500,000 per year using straight line method Depreciation for taxation purpose: $600,000...

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