Introduction to Accounting for Income Taxes Based on Income 2 CPE

ASC 740, Income Taxes, addresses how companies should account for and report the effects of taxes based on income. Unique characteristics of different tax jurisdictions across the United States can make it difficult to determine whether a particular tax is based on income. The existing guidance related to accounting for income taxes under ASC 740 did not change as a result of the passage of the Tax Jobs and Cuts Act. 

ASC 740 establishes standards of financial reporting for currently payable income
taxes as well as deferred income taxes payable at some point in the future. The requirements of ASC 740 can significantly impact how a company reports its current and future income tax expense or benefit on the income statement, as well as how deferred tax assets or liabilities are reported on the balance sheet.

This course focuses on what would constitute a tax based on income. We 
discuss the applicability of ASC 740 to various types of entities including how to define a tax based on income, temporary vs. permanent tax differences and the basic objectives and principles of ASC 740.

Who Should Consider this Course?

Business owners and operational professionals Accountants and Finance professionals and Internal auditors Tax and Legal professionals

Prerequisites

No advanced preparation or prerequisites are required for this course.

Learning Objective

• Identify components of ASC 740 and types of taxes that are included
• Discover how to identify taxes based on income
• Recognize the applicability of ASC 740 based on the entities legal form
• Explore the objectives and basic principles of ASC 740 
• Discover how temporary to identify temporary and permanent differences.
• Explore recognition and measurement principles
• Identify between accounting estimates and errors
• Explore how to account for uncertainty in income taxes

Last updated/reviewed: March 10, 2024