- CFA Exams
- 2021 Level I
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 27. Income Taxes
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Learning Outcome Statements PDF Download
|1. Key Terms|
a. describe the differences between accounting profit and taxable income and define key terms, including deferred tax assets, deferred tax liabilities, valuation allowance, taxes payable, and income tax expense;
|2. Deferred Tax Assets and Liabilities|
b. explain how deferred tax liabilities and assets are created and the factors that determine how a company's deferred tax liabilities and assets should be treated for the purposes of financial analysis;
d. calculate income tax expense, income taxes payable, deferred tax assets, and deferred tax liabilities, and calculate and interpret the adjustment to the financial statements related to a change in the income tax rate;
|3. Determining the Tax Base of Assets and Liabilities|
c. calculate the tax base of a company's assets and liabilities;
e. evaluate the impact of tax rate changes on a company's financial statements and ratios;
|4. Temporary versus Permanent Differences|
f. distinguish between temporary and permanent differences in pre-tax accounting income and taxable income;
|5. Recognition and Measurement of Current and Deferred Tax|
g. describe the valuation allowance for deferred tax assets - when it is required and what impact it has on financial statements;
h. explain recognition and measurement of current and deferred tax items;
|6. Presentation and Disclosure|
i. analyze disclosures relating to deferred tax items and the effective tax rate reconciliation and explain how information included in these disclosures affects a company's financial statements and financial ratios;
|7. Comparison of IFRS and U.S. GAAP|
j. identify the key provisions of and differences between income tax accounting under International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (GAAP).
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