Introduction to Accounting for Income Taxes Based on Income - Intro
Author: Lynn Fountain
| CPE Credit: |
2 hours for CPAs |
ASC 740, Income Taxes, addresses how companies should account for and report the effects of taxes based on income. Unique characteristics of different tax jurisdictions across the United States can make it difficult to determine whether a particular tax is based on income. The existing guidance related to accounting for income taxes under ASC 740 did not change as a result of the passage of the Tax Jobs and Cuts Act.
ASC 740 establishes standards of financial reporting for currently payable income taxes as well as deferred income taxes payable at some point in the future. The requirements of ASC 740 can significantly impact how a company reports its current and future income tax expense or benefit on the income statement, as well as how deferred tax assets or liabilities are reported on the balance sheet.
Publication Date: March 2025
Topics Covered
- Components of ASC 740
- Defining Taxes Based on Income
- Applicability Based on Entities Legal Form
- Basic Principles of ASC 740
- Temporary Difference
- Computing DTA adn DTL
- Permanent Differences
- Accounting Estimates vs Errors
- Uncertainty in Income Taxes
- Improvements to Income Tax Disclosures
Learning Objectives
- Identify components of ASC 740 and types of taxes that are included
- Identify taxes based on income
- Recognize the applicability of ASC 740 based on the entities legal form
- Identify the objectives and basic principles of ASC 740
- Identify temporary and permanent differences
- Identify recognition and measurement principles
- Identify accounting estimates and errors
- Explain how to account for uncertainty in income taxes
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Accounting (2 hours)
Program Prerequisites
Basic understanding of ASC 740
Advance Preparation
None
