Deferred Taxes Overview
Governed by APB #11, FASB #96, FASB #109
General Notion: It is possible to use different accounting principles or methods on the company books &/or the tax return. APB #11 treated this as a rather simple matter.
- APB #11
- ”Deferred method”
- Income statement approach
- Taxable income (TI) arises from government policy and rules; it gives rise to tax payable.
- Pre-tax income (Book) arises from the application of GAAP; it should give rise to tax expense.