ASC 740 Part 1: Practical Application for Accounting for Income Taxes Based on Income

Accounting Standards Codification (ASC) 740, Income Taxes, provides the framework for the recognition, measurement, and disclosure of income taxes in financial statements.

Accounting for income taxes under ASC 740 requires a disciplined approach to recognizing, measuring, and disclosing the tax consequences of transactions and events recognized in the financial statements. This course provides an overview into the application of ASC 740 with an emphasis on the mechanics of income-based tax provisions. Participants will begin by understanding the process of preparing a tax provision, including the identification of temporary and permanent differences, calculation of current and deferred tax expense, and reconciliation of the effective tax rate to the statutory rate.

The program will introduce the technical considerations around valuation allowances, focusing on the weight of positive and negative evidence in determining the realizability of deferred tax assets. Participants be given an understanding of how to evaluate uncertain tax positions under the two-step recognition and measurement model, along with intra-period tax allocation complexities for continuing operations, discontinued operations, and other comprehensive income.

Who Should Attend
This session is designed for tax professionals, controllers, and financial reporting specialists who are directly involved in preparing and reviewing income tax provisions. By combining theoretical rules with illustrative examples and provision calculations, the course equips participants with the tools to apply ASC 740 in practice and enhance the accuracy, transparency, and compliance of their tax reporting.

Topics Covered

• Foundations of ASC 740
• Deferred Tax Assets and Liabilities
• Valuation Allowances
• Uncertain Tax Positions (FIN 48)
• Intra-period Tax Allocation

Learning Objectives

• Identify components of ASC 740 and types of taxes that are included
• Discover how to identify taxes based on income
• Recognize the applicability of ASC 740 based on the entities legal form
• Explore the objectives and basic principles of ASC 740
• Discover how to identify temporary and permanent differences
• Applying recognition and measurement criteria to deferred tax assets and liabilities
• Identify between accounting estimates and errors
• Explore how to account for uncertainty in income taxes
• Discover how to apply the concept of deferred tax assets and deferred tax liabilities to scenarios
• Discover how to apply recognition and measurement issues to examples

Level
Update

Instructional Method
Group: Internet-based

NASBA Field of Study
Accounting (1 hour), Auditing (1 hour)

Program Prerequisites
Basic understanding of financial ratios

Advance Preparation
None