I understand the concepts what im having trouble is knowing when to add back and subtract timing and permanent differences. Can someone enlighten me with this. Thanks By the way this chart is really helpful! Taxable income x SR = Taxes Payable ± (timing differences)xFR +DTL - (Net DTA) ±(permanent Difference Pretax Income x ER = Income Tax expense
Chung, I’m confused. where did you get these formula/equations? I know, Tax Expense = tax payable + DTL - DTA
I dont understand that table, but this is wrong… "Pretax Income x ER = Income Tax expense In the case of a permanent difference, the amount of income tax expense is a “plug” to balance the amount of tax paid, and the dta/dtl from temporary differences…
You can work the chart up or down adding and subtracting pretax income to get taxable income with timing differences, also taxable income and tax expense by multplying by the future rates of the timing diferences you can back into either one…Pretax income x effective rate definitley gives you your income tax expense
chung.da.neu Wrote: ------------------------------------------------------- > You can work the chart up or down adding and > subtracting pretax income to get taxable income > with timing differences, also taxable income and > tax expense by multplying by the future rates of > the timing diferences you can back into either > one…Pretax income x effective rate definitley > gives you your income tax expense This last line above is incorrect (it should read tax payable, not income tax expense). It should be as follows, Effective tax rate = tax payable/pretax income where can i find the chart you posted in CFA text (or schweser)? Thanks.