INCOME TAXES

Income tax is a compulsory financial charge or levy imposed by a government on the income earned by individuals, businesses, or other entities within its jurisdiction. It is a primary source of revenue for governments and is used to fund public services such as infrastructure, healthcare, education, defense, and social welfare programs.

Question 1 L1R31TB-AC016-1605 LOS: LOS-3210 Lesson Reference: Lesson 3: Recognition and Measurement of Current and Deferred Tax and Presentation and Disclosure Difficulty: medium According to IFRS, for each class of plant, property, and equipment, firms are most likely to disclose under the cost model: fair value. the useful life. restrictions on title of intangible assets. Rationale  fair value. Firms are required to disclose many items concerning plant, property, and equipment,...

1. Discuss the two-step process for recognizing and measuring tax benefit of uncertain tax position. Under the FASB interpretation no.48 (FIN 48) accounting for uncertainty in income taxes, there is a clear threshold set for the purpose of recognizing the benefits of tax positions in the financial statements of companies. The more likely than not tax position should be sustained by appropriate taxing authority. It therefore sets out a two-step process for recognizing and measuring tax benefits ...

Tax vs. Financial Reporting I • Tax reporting (thousands) Sales €100,000 Less: Cost of Goods Sold (70,000 Gross Profit €30,000 Less: SG&A ( Less: Depreciation (8,000 Taxable Income €12,000 Income Tax Payable @ 30% 30%(3,600 Profit after Tax €8,400

INTERNATIONAL ACCOUNTING STANDARD 12 INCOME TAXES OBJECTIVE SCOPE 1 DEFINITIONS 5 Tax base 7 RECOGNITION OF CURRENT TAX LIABILITIES AND CURRENT TAX ASSETS 12 RECOGNITION OF DEFERRED TAX LIABILITIES AND DEFERRED TAX ASSETS 15 Taxable temporary differences 15 Deductible temporary differences 24 Unused tax losses and unused tax credits 34 Reassessment of unrecognised deferred tax assets 37 Investments in subsidiaries, branches and associates and interests in joint arrangements 38 MEA...

Income – in broad sense, means ALL WEALTH, which flows into the tax payer other than a mere return of capital. - it is the return in money from one’s business, labor, or capital invested (gains, profits, salary and wages). - it is a flow of the fruits of one’s labor. Income Tax – is a tax on all yearly profits arising from property, profession, trade or business, or is a tax on a person’s income, emoluments, profits and the like. ...

Topic Outline a) Classification of Individual Income Taxpayers b) Sources of Income c) Graduated Tax Rate d) Individual Income Taxpayers e) Basic Proforma Income Tax Computation f) Passive Income, Capital Gains and Fringe Benefits Classification of Individual Income Taxpayers 1. Resident Citizen 2. Non-resident citizen 3. Resident Alien 4. Non-resident alien engaged in trade or business 5. Non-resident alien not engaged in trade or business Citizen Under Article III Sec. 1 of the P...

1. Describe the differences between accounting profit and taxable income and define key terms, including deferred tax assets, deferred tax liabilities, valuation allowance, tax payable, and income tax expense. Definition of Accounting Profit Accounting Profit is the result of operating and non-operating activities of the company. It is the actual financial gain obtained after reducing total expenses from total revenue of the business. It r...

Multiple Choice 1. Among the nature of taxation are the following. Which one is not? a. It is inherent in sovereignty. b. The citizenry benefits from it. c. The government solely benefits from it. d. It is a means by which the government raises income. 2. The following are authorized to administer oaths and take testimony. Who is not? a. BIR Service Chief b. BIR Commissioner c. BIR Deputy Commissioner d. BIR rank-and-file employee 3. In case of conflict between tax laws and generally ...