Get the free PRINCIPLES OF DEFERRED TAXATION

FMM Institute (475427W) Pen ang Branch PRINCIPLES OF DEFERRED TAXATION 4 & 5 July 2012, Wednesday to Thursday 9.00 am 5.00 pm Training Venue: FMM Institute, Band Severing Jay, Pen ang SL SCHEME 100%

How to fill out principles of deferred taxation

How to fill out principles of deferred taxation:

1. Start by understanding the concept of deferred taxation. Deferred taxation refers to the difference between the tax expense recognized in financial statements and the tax payable to the tax authorities. It arises due to temporary differences between the reporting of certain items for financial statement purposes and taxation purposes.
2. Identify the temporary differences in your financial statements. Temporary differences are the main cause of deferred taxation. These differences occur when there is a discrepancy between the carrying amount of an asset or liability in the financial statements and its tax base.
3. Calculate the deferred tax asset or liability. If the temporary difference is expected to result in a future tax benefit, a deferred tax asset should be recognized. In contrast, if the temporary difference is expected to result in a future tax expense, a deferred tax liability should be recognized. Calculate the amount for each temporary difference and record it accordingly.
4. Determine the tax rate to be used. The applicable tax rate for deferred taxation is usually the enacted or substantively enacted tax rate that will be in effect when the temporary difference reverses. This rate should be applied to calculate the deferred tax asset or liability.
5. Prepare the journal entries. Once you have determined the deferred tax asset or liability amount and the applicable tax rate, prepare the necessary journal entries to record the deferred taxation impact. Depending on the circumstances, you may need to debit or credit various accounts to reflect the deferred taxation effect accurately.

Who needs principles of deferred taxation:

1. Businesses that prepare financial statements in accordance with accounting standards need to understand and apply the principles of deferred taxation. This includes both large corporations and small businesses.
2. Accountants and financial professionals responsible for preparing financial statements should possess knowledge of deferred taxation principles. They should be able to identify and calculate temporary differences accurately to determine the deferred tax asset or liability.
3. More specifically, companies with complex financial structures, significant non-current assets and liabilities, and complex business operations may have a higher need for understanding and applying principles of deferred taxation. This includes multinational corporations, real estate companies, and companies with extensive investments and acquisitions.

In summary, anyone involved in financial reporting and accounting should have a grasp of principles of deferred taxation, as they play a crucial role in accurately reflecting a company's tax obligations and future tax impacts in its financial statements.

For pdfFiller’s FAQs

What is principles of deferred taxation?

Deferred taxation is the concept of deferring or delaying tax liability to future periods.

Who is required to file principles of deferred taxation?

Companies or individuals who have transactions that result in deferred tax assets or liabilities are required to file principles of deferred taxation.

How to fill out principles of deferred taxation?

Principles of deferred taxation can be filled out by calculating the deferred tax assets and liabilities and reporting them accurately in the financial statements.

What is the purpose of principles of deferred taxation?

The purpose of principles of deferred taxation is to accurately reflect the tax implications of transactions that span multiple accounting periods.

What information must be reported on principles of deferred taxation?

The information that must be reported on principles of deferred taxation includes the amount of deferred tax assets and liabilities, the tax rate used, and any changes in the deferred tax balance.

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