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Fundamentals of Tax Accruals |
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Overview
This lesson examines the liability method of accounting for income taxes. Under the liability method, both the current tax liability as well as the amount of future taxes payable (deferred tax liability) or refundable (deferred tax asset) must be computed. The sum of these accounts leads to the tax provision that is presented on the company's income statement for the year. Separate computations are made for each tax jurisdiction to which the company is liable. The key to understanding tax accruals is found in the underlying principles of accounting theory. These fundamental principles will be examined as a bridge to the tax accrual process.
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Objectives
On completion of this lesson, participants should be able to:
- Establish the groundwork and theory behind deferred tax principles.
- Recognize the amount of taxes payable or refundable for the current year.
- Recognize deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns.
- Compute an income tax provision and prepare the appropriate journal entries using SFAS 109 accounting procedures.
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Copyright © 1998 Bizzer Professional Training |
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