Comparison Between Tax Payable Method And Tax Impact Accounting Method

First, the relationship between tax payable law and accounting information under tax impact accounting method.

According to the US financial accounting standards board, whether or not an accounting information is relevant is mainly determined by three factors, namely, predictive value, feedback value and timeliness.

If an accounting information can help decision-makers predict future events based on past and present events, the information has predictive value.

If an accounting information enables decision-makers to confirm or correct the prediction results of past decisions, the information has feedback value.

Promptness means that accounting information should be provided to decision makers before losing the ability to influence decisions.

1. predicts the value of accounting information under the tax law and the tax impact accounting method.

The current income tax expense calculated according to the tax payable method is equal to the income tax payable according to the current taxable income and the applicable income tax rate. The amount of income tax arising from the difference of time difference is not accounted for and reflected separately.

Because of the influence of time difference, the accounting information obtained from the "income tax" project of the financial reporting user is only the amount of income tax payable by the current enterprise according to the tax law. It can not accurately grasp the impact of the time difference on the income tax in the current period, and can not effectively predict the future income tax expenses of the enterprise.

Therefore, the income tax expense calculated according to the tax payable method is of little predictive value.

The accounting law considers that income tax is a kind of expense, which is the same as other taxes and fees paid by enterprises. It is the outflow of assets caused by enterprises in order to obtain certain profits, which should be regarded as cost handling.

Taking the income tax as a cost, we must follow the matching principle and match it with the proceeds in a certain accounting period, that is, the intertemporal allocation of the income tax expenses, the number of income tax effects arising from the time difference will be recognized as assets or liabilities respectively, and the number of the effects will be deferred to the later stage as the income tax expense or revenue.

The impact of time difference on income tax is included in the "income tax" in the income statement and in the "deferred tax" item in the balance sheet.

For example, depreciation of fixed assets should be accelerated by depreciation when filing tax, and straight line method should be used for accounting treatment, which will make the pre Tax Taxable Income of fixed assets less than pre tax accounting income.

This time difference produces a deferred liability, that is, future tax payable. When accounting is processed, the future taxable amount is credited to the deferred tax account.

At this point, the income tax expense not only reflects the amount of income tax payable according to the tax law, but also reflects the deferred liabilities arising from time difference, that is, the future tax payable by the straight-line law rather than the accelerated depreciation method.

This enables financial reporting users not only to understand the impact of the current time difference on the income tax, but also to help them predict the difference in the future accounting period and the impact on future income tax costs.

Therefore, under the tax impact accounting method, the figures in "income tax" and "deferred tax" account have more predictive value.

2. the feedback value of accounting information under the tax law and the tax impact accounting method.

The income tax payable under the tax law is calculated according to the provisions of the tax law. Therefore, the feedback value of the "income tax" account is that it reflects the amount of income tax that the accounting income generated by the enterprise's current production and operation activities should be adjusted after the tax law is adjusted.

The accounting information under tax impact accounting method has greater feedback value. It reflects not only the same accounting information reflected through the "payable tax payable income tax" account, but also reflects the time difference between the time difference of the current period and the current income tax through the debit or credit of the deferred tax account.

3. to deal with the timeliness of accounting information under the tax law and the tax impact accounting method.

The tax payable method and the tax impact accounting law reflect the income tax payable by the enterprise in the current period.

However, the accounting information under the tax payable law can not reflect the time difference in the current period due to neglecting the effect of time difference on income tax.

The tax impact accounting rules can be reflected in time.

Two, the reliability analysis of accounting information under the tax law and the tax impact accounting method. The reliability of accounting information is to ensure that accounting information is free from errors and deviations, and can faithfully reflect the phenomena or situations that it wishes to reflect.

If accounting information is not reliable, it will not only help to make decisions, but may also lead to wrong decisions.

Whether accounting information is reliable can be measured by its two components, that is, authenticity and nuclear.

Authenticity means that a measurement or description is consistent with or consistent with the phenomenon or situation to be expressed.

Nuclear nature means that different individuals with similar background can use the same measurement method to measure the same matter and get the same result.

In other words, verifiability ensures that the metrology is measured correctly and without bias in the way it chooses, regardless of whether the method is appropriate.

1. meets the authenticity of accounting information under the tax law and the tax impact accounting law.

The tax payable law is based on the theory of profit distribution.

According to this view, the income tax burden in corporate profits is a part of the net income of enterprises. The nature of the income tax is the distribution of profits and the payment (distribution) to the government.

This view requires that all the discrepancy between accounting standards and tax laws be recognized as income tax expense in the current period when calculating the current income tax.

There is a necessary connection between income tax and taxable income, that is, income tax is only generated when the income of economic matters is combined with the taxable income of the period.

Therefore, the income tax comes from taxable income only. When the taxable income is generated, the current income tax should be recognized immediately, and the income tax must not be linked to the pre tax accounting profits of the enterprise.

Intertemporal apportionment of income tax costs can easily lead to artificial average pre and post accounting earnings, and can not truly reflect enterprise's after tax profits.

Therefore, based on the viewpoint of "profit distribution theory", the income tax expense payable under the tax law really reflects the income tax payable by the enterprise on the basis of the current operating income, and the net profit after tax reflects the residual income of the enterprise after tax.

The accounting method of tax impact is based on the "cost theory".

According to this view, the income tax is the expenditure incurred in order to make the enterprise get net profit finally. It should be treated as expenses.

In order to reflect the effect of time difference on income tax, we must follow the principle of proportionality, and share the income tax expenses in different periods.

There are different choices in how to share and distribute the relevant accounting process.

There are two ways of apportionment and total apportionment.

Part of the apportionment is the cost sharing of the intertemporal income tax on the non recurring time difference, while the intertemporal income tax cost is not shared for the repeated time difference.

The total apportionment is to confirm the effect of the income tax accounting on the future income tax whether it is repeated or not.

Under the tax impact accounting method, the calculation of the income tax impact caused by the difference between income tax and time difference will be affected by the professional judgment of accountants and other factors.

Therefore, the income tax expense calculated by the tax impact accounting method is very difficult to tally with the facts to be expressed.

2. is able to handle the accounting information under the tax law and the tax impact accounting method.

The income tax payable under the tax payable method is calculated in accordance with the taxable income stipulated in the tax law, and is highly nuclear.

Under the tax impact accounting method, there are different choices for the intertemporal allocation of income tax expenses, and under the same apportionment method, it is necessary to measure the income tax expenses with the experience of accountants and the understanding of economic matters. Therefore, it is easy to mix individual preferences and different people may draw different conclusions and have no nuclear nature.

According to the above analysis, we can find that the reliability of accounting information under the tax payable method is better than that of the tax payment, and the correlation between accounting information and the accounting method under the influence of the tax law is better than that of the tax payable method. Three.

This is mainly caused by the different theoretical basis of the two methods.

The tax payable method based on the theory of profit distribution emphasizes the reliability of accounting information, so the income tax cost is equal to the enterprise's income tax payable in the current period.

However, this method ignores the relevance of accounting information, does not reflect the effect of time difference on the income tax, and the users of financial reports can not get enough information about the future and make decisions.

Based on the "cost theory", the tax impact accounting law emphasizes the relevance of accounting information, that is, prediction value, feedback value and timeliness. The number of income tax generated by time difference will be reflected in the financial report, which is conducive to users of financial statements making various decisions.

However, due to the influence of human factors on the choice of the intertemporal allocation method of income tax expenses, the reliability of income tax expenses is affected to a certain extent. In practice, it is difficult to improve the relevance and reliability of accounting information at the same time.

Therefore, when using the tax payable method or the tax impact accounting method, the users of financial reports need to analyze and weigh the differences in the quality of accounting information produced by the two methods.

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