1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Chapter 18 Accounting for income taxes 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Introduction to accounting for income taxes Understand the difference between accounting profit and taxable income 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e Some differences between accounting and tax rulesItemGenerally accepted accounting ruleTax ruleMany accrued expenses (e.g. long-service leave, warranty costs)An expense when accruedRecognised as a tax deduction when paidMany prepaid expenses (e.g. prepaid rent)Initially an asset—expensed when economic benefits usedTypically a tax deduction when paidRevenue received in advance (e.g. rental revenue)Treated as a liability and recognised as revenue when earnedTypically taxed when receivedEntertainment and goodwill impairmentTreated as an expenseNot a tax deduction in current or subsequent periodsDoubtful debtsTreated as an expense when recognisedTreated as a tax deduction when debtor is actually written off in subsequent periodDevelopment expenditureOften capitalised and subsequently amortisedTypically a tax deduction when paid for 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Balance sheet approach to accounting for taxation Accounting for income taxesGoverned by AASB 112 Income Taxes Balance sheet methodDTA ad DTL Carrying Amount (CA) – Book value Tax base – taxation rules 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Balance sheet approach to accounting for taxation Rules and Format TTD – taxable temporary difference – deferred tax liability DTD – deductible temporary difference – deferred tax asset 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Balance sheet approach to accounting for taxation 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Have a read of the facts in Worked Example 18.2 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Balance sheet approach to accounting for taxation Rules and Format 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Have a read of the following slides on your ownThese are a summary of the chapter and I have already discussed the points during the Podcasts 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Measurement of DTAs and DTLs (cont.) 1.- Copyright © 2020 McGraw-Hill Education (Australia) Pty Ltd Deegan, Financial Accounting 9e 18-* Balance sheet approach to accounting for taxation (cont.) Temporary differences can be of tw ...