f12Corporations Income and TaxesBusiness(公司金融会计).ppt

1. Corporate Income Taxes 2. Unusual Income Statement Items 3. Earnings Per Common Share 4. Reporting Stockholders’ Equity 5. Comprehensive Income 6. Accounting for Investment in Stocks 7. Business Combinations 8. Financial Analysis and Interpretation Corporations are taxable entities that must pay income taxes. Because income tax is often a significant amount, it is reported as a special deduction. Taxable income is determined according to tax laws which are often different from income before income tax according to GAAP. Differences in tax law and GAAP create some temporary differences that reverse in later years. Temporary differences do not change or reduce the total amount of tax paid, they affect only the timing of when the taxes are paid. Income Tax Expense 120,000 Income Tax Payable 40,000 Deferred Income Tax Payable 80,000 Deferred Income Tax Payable 48,000 Income Tax Payable 48,000 Income Tax Expense 120,000 Income Tax Payable 40,000 Deferred Income Tax Payable 80,000 Income Tax Expense 120,000 Income Tax Payable 40,000 Deferred Income Tax Payable 80,000 Income Tax Expense 120,000 Income Tax Payable 40,000 Deferred Income Tax Payable 80,000 Three types of unusual items are: 1. Results of discontinued operations. 2. Extraordinary items of gain or loss. 3. A change from one generally accepted accounting principle to another. These items and the related tax effects are reported separately in the income statement. Jones CorporationIncome StatementFor the Year Ended December 31, 2003 Net sales $9,600,000 Income from continuing operations before income tax $1,310,000 Income tax 620,000 Income from continuing operations $ 690,000 Loss on discontinued operations (Note A) 100,000 Income before extraordinary items and cumulative effect of a change in accounting principle $ 590,000 Extraordinary item: Gain on condemnation of land, net of applicable income tax of $65,000 150,000 Cumulative effec