Why are differences between taxable and financial income

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Intermediate Accounting

1. Why are there differences between taxable and financial income? What are some examples of permanent and temporary differences? Why do these differences exist? How do they affect the financial statements?

2. How are deferred tax assets and deferred tax liabilities derived? How do they relate to the difference between tax expense and taxes payable? How could an organization have a tax receivable? Why is the tax expense reported on the income statement comprised of current and deferred tax?

3. How are the tax benefits of net operating losses (NOL) disclosed on financial statements? Which is more beneficial to an organization, an NOL carryforward or an NOL carryback? Explain why. When would a company decide to forego a carryback?

4. What are the possible treatments for tax purposes of a net operating loss? What are the circumstances that determine the option to be applied? What is the proper treatment of a net operating loss for financial reporting purposes?

Reference no: EM131392861

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