Chapter 8: Analysis of Income Taxes

In this section

• Accounting Profit vs. Taxable Income
  Explore the key differences between accounting profit and taxable income, understand permanent vs. temporary differences, and see how these disparities affect financial statement analysis and valuation.
• Temporary vs. Permanent Differences
  Explore how differences in financial reporting and tax reporting arise, focusing on which differences ultimately reverse and which do not. Learn to distinguish between temporary and permanent items, their impact on deferred taxes, and how to interpret these variances when forecasting a company’s future tax obligations.
• Deferred Tax Assets and Liabilities
  Comprehensive discussion of how deferred tax assets and liabilities arise, their impact on financial statements, and key considerations under IFRS and US GAAP.
• Effective Tax Rate vs. Statutory Tax Rate vs. Cash Tax Rate
  A comprehensive examination of the three key tax rates—statutory, effective, and cash—and how they shape financial statements and forecasts.
• Valuation Allowances for Deferred Tax Assets
  Explore the key considerations, impacts, and strategy behind valuation allowances for deferred tax assets, including real-world examples, IFRS vs. US GAAP perspectives, and analyst insights.
• Uncertain Tax Positions and Interpretations
  Explore the recognition, measurement, and disclosure of uncertain tax positions under ASC 740 and IFRIC 23, their impact on financial statements, and best practices for effective risk management.
• Impact of Tax Holidays on Deferred Taxes
  Explore how tax holidays create unique challenges for deferred tax accounting, learn about different holiday types, modeling considerations, and risks.
• Capital Gains vs. Ordinary Income Taxation
  Explore how companies differentiate between capital gains and ordinary income, accounting treatment under IFRS and US GAAP, and key analytical considerations for deferred taxes and financial statement analysis.
• Corridor Approaches and Recognition of Actuarial Gains/Losses
  Learn how corridor approaches smooth pension expense volatility under older US GAAP, how IFRS requires immediate recognition of actuarial gains/losses in OCI, and the deferred tax implications.
• IFRS vs. US GAAP Differences in Income Tax Accounting
  A comprehensive guide comparing key distinctions between IFRS (IAS 12) and US GAAP (ASC 740) in the treatment of income taxes, valuation allowances, uncertain tax positions, classification, and rate change recognition.