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Deferred Tax Liabilities and Assets

The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense.

a. Explain the objectives of accounting for income taxes in general purpose financial statements.

b. Explain the basic principles that are applied in accounting for income taxes at the date of the financial statements to meet the objectives discussed in (a).

c. List the steps in the annual computation of deferred tax liabilities and assets.

Solution Preview

a. Explain the objectives of accounting for income taxes in general purpose financial statements.

The objectives of accounting for income taxes are to recognize (a) the amount of taxes
payable or refundable for the current year and (b) deferred tax liabilities and assets for the future
tax consequences of events that have been recognized in an enterprise's financial statements or
tax returns.

b. Explain the basic principles that are applied in accounting for income taxes at the date of the financial statements to meet the objectives discussed in (a).

The following basic principles are applied in accounting for income taxes at the date ...

Solution Summary

Deferred tax liabilities and assets are analyzed. The objectives of accounting for income taxes in general purpose financial statements are examined.

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