Practical Application for Accounting for Income Taxes Based on Income

Author: Lynn Fountain

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2028 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

This course will take the building block concepts learned in the ASC 740 Introduction Course and attach practical applications to the concepts. We use multiple examples and scenarios to explain the concepts.

NOTE – It is recommended that you view the course ASC 740 Introduction – Accounting for Taxes Based on Income prior to taking this course.

Even at a basic level, ASC 740 (previously FAS 109), Accounting for Income Taxes is a challenging pronouncement to master and apply in terms of preparing the corporate tax provision. ASC 740 addresses financial accounting and reporting for the effects of income taxes - federal, foreign, state and local - that result from an enterprise's activities during the current and preceding years. As a result of these efforts, companies are able to recognize current year taxes due or refundable and manage expected future tax consequences of deferred assets and liabilities.

From terms and definitions to calculations and reporting, the financial accounting standard for calculating and reporting income tax provisions demands close attention. In part one of this series, we will examine some of the basic concepts to ensure practical application for accounting for income taxes based on income.

Publication Date: March 2025

Designed For
Controllers, Accountants, Auditors, Tax Professionals

Topics Covered

• Purpose of Deferred Taxes
• Temporary Difference
• Examples of Temporary Difference
• ASC 740 Examples of TD
• Permanent Differences
• Accounting Estimates vs. Errors
• Uncertainty in Income Taxes

Learning Objectives

• Identify how to book temporary vs. permanent differences
• Explain how to apply the concept of deferred tax assets and deferred tax liabilities to scenarios
• Identify and apply uncertainty for income tax
• Recognize outlining concepts that are embedded in tax based on income
• Explain how to apply recognition and measurement issues to examples

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (1 hour)

Program Prerequisites
It is recommended that you view the course ASC 740 Introduction – Accounting for Taxes Based on Income prior to taking this course.

Advance Preparation
None