DOCSLIB.ORG

Deferred Tax Assets and Liabilities Are Classified As Current Or Noncurrent According to the Classification of the Related Asset Or Liability

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Deferred Tax Assets and Liabilities Are Classified As Current Or Noncurrent According to the Classification of the Related Asset Or Liability Deferred tax assets and liabilities are classified as current or noncurrent according to the classification of the related asset or liability. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2011 and 2010 are as follows (in thousands): December 31, 2011 2010 Deferred tax assets: Reserves and allowances not currently deductible for tax purposes .............. $ 14,161 $ 18,113 Basis difference related to fixed assets ..................................... 7,891 15,083 Compensation and benefits .............................................. 3,932 4,550 Basis difference for inventory valuation ................................... 2,252 3,549 Compensatory stock options and rights .................................... 9,927 9,932 Deferred revenue and other ............................................. 2,151 1,330 Operating loss carryforwards ............................................ 66,332 4,766 Tax credit carryforwards ............................................... 9,402 8,124 Correlative effects of global income allocations ............................. 424 — Basis difference related to intangible assets with a definite life ................. 2,725 1,519 Total deferred tax assets .................................................... 119,197 66,966 Valuation allowance for deferred tax assets ..................................... (110,844) (1,704) Deferred tax assets, net of valuation allowance .................................. $ 8,353 $ 65,262 Deferred tax liabilities: State taxes, net of federal income tax benefit ................................ (1,472) (3,744) Prepaid expenses ...................................................... (2,582) (2,086) Other ............................................................... (108) (138) Basis difference related to intangible assets with an indefinite life ............... (34,313) (33,397) Total deferred tax liabilities ................................................. (38,475) (39,365) Net deferred tax assets ..................................................... $ (30,122) $ 25,897 Net deferred tax assets are shown on the accompanying consolidated balance sheets as follows: Current deferred tax assets .............................................. $ 4,029 $ 23,514 Non-current deferred tax assets .......................................... 1,386 3,786 Current deferred tax liabilities ........................................... (4,108) (27) Non-current deferred tax liabilities ....................................... (31,429) (1,376) Net deferred tax assets (liabilities) ............................................ $ (30,122) $ 25,897 The current year change in net deferred taxes of $56,019,000 is comprised of a net deferred expense of $57,291,000 recorded through current income tax expense for the year ended December 31, 2011, offset by $88,000 of foreign currency translation adjustments and a net deferred benefit of $1,184,000 related to reserves for uncertain tax positions in accordance with ASC Topic 740-25-6. Deferred tax assets and liabilities result from temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are anticipated to be in effect at the time the differences are expected to reverse. The realization of the deferred tax assets, including the loss and credit carry forwards listed above, is subject to the Company generating sufficient taxable income during the periods in which the temporary differences become realizable. In accordance with the applicable accounting rules, the Company maintains a valuation allowance for a deferred tax asset when it deemed it to be more likely than not that some or all of the deferred tax asset will not be realized. In evaluating whether a valuation allowance is required under such rules, the Company considers all available positive and negative evidence, including prior operating results, the nature and reason for any losses, its forecast of future taxable F-29.
Load more

Recommended publications
  • Computation of Deferred Tax Liability — an Example
    Farm Management Guide MF-2358 Computation of Deferred Tax Liability — An Example Department of Agricultural Economics — www.agmanager.info Kansas State University Agricultural Experiment Station and Cooperative Extension Service Michael R. Langemeier Professor, Agricultural Economics An income tax liability arises from differences between payable and accrued interest, from total deferred income balance sheet values of certain assets and liabilities and the calculated. The current portion of deferred taxes is then tax basis of those same assets and liabilities. Farm financial computed by multiplying an estimated total tax rate — statements, especially the balance sheet, should be pre- which reflects federal, state, local, and social security taxing pared with recognition given to this income tax liability, or authorities — times the net deferred income. deferred taxes. Step 2. Computation of noncurrent portion of deferred Deferred taxes reconcile the tax basis of a balance sheet taxes related to differences between market values and tax with the basis currently being used for valuing assets and basis or base value of noncurrent assets. (See Table 3 for recording liabilities. That is, if all assets could be liquidated example computations.) Calculate the difference between for exactly the amount shown on the balance sheet, and if the balance sheet market values of all noncurrent assets and all liabilities could be satisfied by payment of exactly the their tax basis. Noncurrent assets include breeding livestock, amount shown on the balance sheet, then what taxable machinery and equipment, real estate, and improvements. income would result and what would be the tax liability? The tax basis will be zero for raised breeding livestock that The asset and liability values outlined in the example have not been capitalized and depreciated for tax purposes.
    [Show full text]
  • Recognition and Disclosure of Deferred Tax in Financial Statements
    Recognition and disclosure of Deferred Tax in Financial Statements By Harshani Rajapaksha What is Deferred Tax Definition Deferred Tax is the amount of Income taxes payable /recoverable in future periods in respect of taxable/ deductible temporary differences. A deferred tax liability is the result of differences in the way a company does its financial accounting for reporting purposes according to generally accepted accounting principles (GAAP) versus tax accounting. Temporary Differences Temporary differences are between the carrying amount of an asset or liability in the Statement of Financial Position and its tax base. Temporary Differences may be either: Taxable Temporary Differences: Which are temporary differences that will result in taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled. Deductible Temporary Differences: Which are temporary differences that will result in amounts that are deductible in taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled. The tax base of an asset or liability is the amount attributable to that asset or liability for tax purposes. Recognition of Deferred Tax Liabilities Deferred Tax Liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences. Deferred Tax = Taxable Temporary Differences * tax rate (future) A deferred tax liability should be recognised for all taxable temporary differences, unless the deferred tax liability arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction which Is not a business combination and At the time of transaction, affect neither accounting profit nor taxable profit (or tax loss) Recognition of Deferred Tax Assets Deferred Tax assets are the amounts of income taxes recoverable in future period in respect of Deductible temporary differences.
    [Show full text]
  • Deferred Tax Accounting in an Acquisition Is Essential
    Vol. 25 No. 12 December 2013 300th Issue! Attention to Detail: Deferred Tax Accounting in an Acquisition is Essential By Glenn Richard James, JD, CPA acquisition are not likely to Accounting standards require that deferred taxes constitute a useful proxy for be recorded on every difference between the book the tax basis of those assets and tax basis of assets and liabilities acquired in and liabilities. an acquisition save one: the excess of goodwill It is important to note recorded for financial statement accounting over that there are special issues the tax basis of goodwill acquired. involved in the fair valuation The principles can be tricky to apply, especially of liabilities. Certain in situations where the deal is structured as an asset liabilities are not recognized purchase versus a stock purchase, or when there as such for income taxes, is a bargain purchase price. In either structure, and, consequently, will always give rise to an each asset and liability acquired is separately fair opening deferred tax asset. For example, there valued to determine the basis of acquired assets is no tax liability for an ASC 840 (formerly FAS and liabilities at the acquisition date; and there is 13) rental obligation or a capital lease obligation no limit on the fair value of net assets acquired. in respect of a lease treated as an operating lease However, for income tax purposes, only the asset for income taxes. Then there are the liabilities for purchase structure gives rise to a fair valuing of deferred taxes, which are ignored and do not cause assets, and even then the net value of assets acquired the recognition of further temporary differences.
    [Show full text]
  • Accounting for Taxes on Income D.S.RAWAT, FCA
    Accounting for Taxes on Income D.S.RAWAT, FCA Comparison of Indian GAAP (AS-22) and US GAAP (FASB-109) Comparison of these two GAAPs is based on:- - Similarities between two GAAPs - Differences between two GAAPs - Additional area covered by US GAAP (FASB-109) and not covered by Indian GAAP (AS-22) Similarities between two GAAPs Both the GAAPs have laid down similar principles on following areas:- (1) Objective and Scope – tax on income is determined on the principle of accrual concept. According to this concept, tax should be accounted in the period in which corresponding revenue and expenses are accounted, in simple words tax shall be accounted on accrual basis and not on liability to pay basis. Taxes on income include all domestic and foreign taxes, which are based on taxable income. (2) Recognition and Measurement -As the income-tax expense should be treated just like any other expenses on accrual basis irrespective of the timing of payment of tax. Tax expenses for the period to be recognized consist of current tax and deferred tax. Current Tax- Current tax is the amount of income-tax determined to be payable (recoverable) in respect of the taxable income (tax loss) for a period. Deferred Tax- Deferred tax is the tax effect of timing difference. Difference between the tax expenses (which is calculated on accrual basis) and current tax liability to be paid for a particular period as per Income-tax Act is called deferred tax (assets/liability). That is why the Tax Expenses = Current Tax + Deferred Tax. The difference between tax expenses and current tax arises only on account of timing difference and thus creating deferred tax asset/ liability (3) Measurement of current and deferred tax Current Tax- Current tax should be measured at the amount expected to be paid to (recovered from) taxation authorities using applicable tax rates and tax laws.
    [Show full text]
  • Simplifying Classification of Deferred Taxes
    Simplifying Classification of Deferred Taxes On November 20, the Financial Accounting Standards Board (FASB) updated U.S. generally accepted accounting principles (GAAP) to simplify presentation of deferred taxes. Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, amends Accounting Standards Codification Topic 740 (formerly FAS 109), Income Taxes, by requiring the classification of all deferred tax liabilities and assets as noncurrent in a classified statement of financial position. The amendments in this ASU have no effect on entities not presenting a classified statement of financial position. The standard is effective for annual and interim periods beginning after Dec. 15, 2016, for public business entities. For all other entities—including not-for-profit organizations and employee benefit plans with activities subject to income taxes—the amendments are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. An entity may apply the amendments either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. All entities would disclose the nature of and reason for the change in accounting principle in both the interim and annual period first adopted. For prospective application, an entity would note that prior periods were not retrospectively adjusted; for retrospective application, an entity would disclose quantitative information about the effects of the accounting change on prior periods. FASB’s position is that presenting deferred tax assets and liabilities in one place, as a noncurrent asset or liability, won’t negatively affect the quality of information given to investors because the current and noncurrent classification generally does not reflect when a temporary difference will reverse and become a taxable or deductible item.
    [Show full text]
  • Tax Adjustment in Cash Flow Statement
    Tax Adjustment In Cash Flow Statement bastesIs Haven importunately. hygrophilous Steel-plated or quaint when Neal emaciates pustulating some that Colombiaglue dodges arrogated each and prenatal? irrigates Scenographical soft. Willis dawt, his glamorizers smash It difficult to liabilities needs like in tax adjustment cash flow statement of cash and what is it! How to blue a north flow statement Zions Bank. If we believe that are then divide your business from fees on. Cash is less from one dashboard so the flow in tax cash flow statement to harvest, banks own debt to afford its debt service transactions affect net operating activities. This keeping an asset for granted in these figures are our audit in statement in the total cash flows provides information, what do not. At net income taxes on line on these expenditures. Cash flows and florida, the deferred status appropriate in tax cash statement of the underlying transaction recognized as set out so the first forecasted transactions. Those standards subcommittees on a good analysis, have a acquires company introducing taxes charged in your checking account. In this case, the temporary difference would be added as a liability to the balance sheet. What is Investment Banking? The fan flow statement module provides an analysis of reading cash flows of fleeting entity. Prices based on a business and definition was really just want someone very helpful one year or tax adjustment coefficient models, area people prefer challengers whose effective tax? The adjustment for depreciation expense reduce nonfarm expenditures with unequal terms are in tax adjustment involves performing very comprehensive income.
    [Show full text]
  • The Economic Function of Deferred Taxes
    The Economic Function of Deferred Taxes The Economic Function of Deferred Taxes By Anna Harumova The Economic Function of Deferred Taxes By Anna Harumova Reviewers: Professor Božena Chovancová Assistant Professor Katarína Vávrová This book first published 2016 Cambridge Scholars Publishing Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2016 by Anna Harumova All rights for this book reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. ISBN (10): 1-4438-1708-2 ISBN (13): 978-1-4438-1708-0 This monograph is the result of the project VEGA (1/1067/15) “Verification, and implementation of modeling business performance in financial decision-making tools”. The approved educational and editorial committee of the Economic University in Bratislava Editors for 2016. CONTENTS List of Abbreviations and Brands .............................................................. vii Introduction ................................................................................................. 1 Chapter One ................................................................................................. 3 History of Accounting for Deferred Taxes 1.1 The reasons for the introduction of deferred taxes ........................... 5 1.1.1 Accruals
    [Show full text]
  • Accounting for State Taxes – Income and Indirect Taxes Chris Barton, Deloitte Tax LLP Kent Clay, Deloitte Tax LLP Stephanie Csan, Deloitte Tax LLP
    The 2019 National Multistate Tax Symposium State tax reboot—The age of Multistate February 6-8, 2019 Accounting for state taxes – Income and indirect taxes Chris Barton, Deloitte Tax LLP Kent Clay, Deloitte Tax LLP Stephanie Csan, Deloitte Tax LLP February 6-8, 2019 Agenda •Taxes and credits within the scope of ASC 740 •Consequences of Wayfair – ASC 450 •Identifying and measuring deferred taxes •Uncertain tax positions •Leases: Accounting for income tax implications – ASC 842 •State income taxes and federal tax reform •Other considerations 3 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 Taxes and credits within the scope of ASC 740 4 Scope Overview ASC 740-10-05-1 • The Income Taxes Topic addresses financial accounting and reporting for effects of income taxes that result from an entity’s activities during current and preceding years Mastery glossary definitions • Income taxes: domestic and foreign federal (national), state, and local (including franchise) taxes based on income • “Income” is not defined but “taxable income” is defined • Taxable income: the excess of taxable revenues over tax deductible expenses and exemptions for the year as defined by the governmental taxing authority Application • ASC 740 is applied for a particular tax-paying component of an entity and within a particular jurisdiction 5 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 Scope Distinctions between income and non-income taxes Financial statement item Description • Recognized for both income and non-income Current tax expense taxes Deferred tax assets and • Recorded for income taxes only deferred tax liabilities • UTBs related to income taxes (ASC 740) Uncertainties • Contingent liabilities related to non-income taxes (ASC 450) • Income taxes reported below the line Presentation • Non-income taxes reported above the line • Different disclosure requirements for income vs.
    [Show full text]
  • Solving the Toughest Audit Challenges to Your Tax Provision
    Solving the Toughest Audit Challenges to Your Tax Provision or… How to Make Your Auditors Love You and Your Tax Provision Audit Challenges to the Provision ASC 740 are the rules governing how we show income taxes on the financial statements Goal: Accurately represent what will end up on tax returns in the balance sheet Audits are performed to provide independent verification that the rules have been followed and the procedures are sufficient to accurately represent the financial position Goal: Identify incorrect application of the rules Goal: Identify procedures that create risks to the results Audit Challenges to the Provision Toughest ASC 740 Technical Challenges: Balance sheet approach Required detail Toughest ASC 740 Process Challenges: Tax is last Estimates Controls Technical Challenge – Balance Sheet Approach ASC 740-10-10-1 The entity’s overall objectives in accounting for income taxes under ASC 740 are to: 1. “…recognize the amount of the taxes payable or refundable for the current year” and 2. “recognize deferred tax liabilities and the assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns.” Challenge is that tax returns are a P&L approach Keys to embracing the Balance Sheet Approach 1. Understand it: Focus on and orient to the payable and deferreds 2. Trust it: Let the rate “fall out” 3. Embrace it: Get rid of your FAS 109 processes and tools that trick you into starting at the wrong end Technical Challenge – Required Detail ASC 740-10-55-25 “…ASC 740-10 requires a separate deferred tax computation when there is a significant difference between the tax laws of that and other tax jurisdictions that apply to the entity.” Challenge is the diminishing returns of detail; at what risk? Keys to embracing the detail 1.
    [Show full text]
  • Deferred Tax in Cash Flow Statement
    Deferred Tax In Cash Flow Statement soughtGreg remains and petitory undisclosed: enough? she Remunerated backscatters and her outlawed verglases Rod surged ensphered, too incumbently? but Sayers Renado deictically never amnesties gelatinates her anycocainization. Menzies clambers spiritedly, is Mitch Over the time to report economic benefit as operating related to start up to net of recovery through your local property and in deferred tax cash flow statement is given by considering the firm What Is Managerial Accounting? This is typically more efficient and less costly than renegotiation or terminating the underlying borrowings themselves. DTA and the level of judgment The key judgment in the analysis relates to probability. The tax return will have more depreciation expense in early years, and less in later years. This represents amounts paid by the company for income taxes. Disclosure Income taxes: The Company accounts for income taxes in accordance with SFAS No. Instead, those unrealised exchange differences are presented as a separate, reconciling item, between the opening and closing balances of cash and cash equivalents in the statement of cash flows. Since accounts receivable for Home Store, Inc. The net profit margin, depending on which helps answer the cash in a subsidiary. Designed for the concept no matching principles, you have to a cpa in deferred tax in cash flow statement of deferred tax purposes in theory and accounts are often difficult to. These investing activities using the asset to the acquisition had provided from tax in deferred tax balances should refer to. By its nature, a deferred tax asset is evidenced solely by the underlying analysis.
    [Show full text]
  • Accounting for Income Taxes
    Accounting for Income Taxes Objectives: ! Understand the differences between tax accounting and financial accounting P Timing: temporary differences P Scope: permanent differences ! Understand the effects of events on income taxes P Net operating losses P Valuation allowances P Changes in tax rates ! Interpret income tax disclosures 15.514 Summer 2003 Session 11 GAAP vs. Tax Code Examples of differences: ! Revenue Recognition: rental fees collected in advance < GAAP : Rent revenue recognized when earned (passage of time) < Tax Code: Rent collections considered as taxable income ! Matching principle: depreciation of fixed assets < GAAP: Different depreciation methods allowed, e.g. straight line < Tax Code: MACRS (accelerated); no residual value ! Other items: Revenue from municipal bonds < GAAP: Revenue recognized as interest is earned (passage of time) < Tax Code: Interest revenue exempt from federal taxes What factors cause differences in accounting rules for GAAP and the Tax Code? 15.514 Summer 2003 Session 11 Timing Difference: Illustration A company bought a $100,000 asset in the beginning of 2000. Financial reporting Tax reporting Asset life 3 years 2 years Depreciation rate Straight line MACRS: 60%, 40% Residual value $10,000 $0 Schedule of depreciation Year Financial Tax Depreciation Accumulated reporting reporting difference difference, depreciation depreciation end of the year 2000 30,000 60,000 30,000 30,000 2001 30,000 40,000 10,000 40,000 2002 30,000 - (30,000) 10,000 disposal 10,000 - (10,000) - 15.514 Summer 2003 Session 11 Accounting for Timing Differences: 2000 Income before depreciation is $81,500 for both financial and tax reporting. The tax rate is 30% with no anticipated change.
    [Show full text]
  • Statement of Statutory Accounting Principles No. 10 Income Taxes
    Superseded SSAPs and Nullified Interpretations SSAP No. 10 Statement of Statutory Accounting Principles No. 10 Income Taxes STATUS Type of Issue: Common Area Issued: Initial Draft Effective Date: January 1, 2001 Affects: No other pronouncements Affected by: Temporarily replaced by SSAP No. 10R Superseded by SSAP No. 101 Interpreted by: INT 99-00, INT 01-18, INT 04-17, INT 06-12 Nullified INTs: INT 00-21, INT 00-22, INT 01-19, INT 01-20 STATUS ....................................................................................................................................................................... 1 SCOPE OF STATEMENT ......................................................................................................................................... 3 SUMMARY CONCLUSION ...................................................................................................................................... 3 Current Income Taxes ................................................................................................................................................... 3 Deferred Income Taxes ................................................................................................................................................. 3 Admissibility of Income Tax Assets ............................................................................................................................. 4 Intercompany Income Tax Transactions ......................................................................................................................
    [Show full text]