Key To Balance Sheet Liability Method

Use

1. determine the deferred income tax in the balance sheet in accordance with the accounting standards.

2. in accordance with the accounting standards for determining the tax basis of assets and liabilities, based on applicable tax laws and regulations, the tax basis of assets and liabilities items in the balance sheet is determined.

Analysis of its nature, in addition to the special circumstances specified in the accounting standards (indicating that not all temporary differences are deferred income tax assets or deferred income tax liabilities), is the difference between taxable temporary differences and deductible temporary differences. The amount of deferred income tax liabilities and deferred income tax assets (final balance) should be determined on the balance sheet date, and compared with the balance of the deferred income tax assets and deferred income tax liabilities at the beginning of the period, the amount of deferred income tax assets and deferred income tax liabilities or the amount to be pferred should be further recognized as the deferred income tax expense (or income) that constitutes the income tax expense in the income statement. 3. comparing the book value of assets and liabilities with their tax base, there is a difference between them.

Note: the corresponding subjects of deferred income tax assets and deferred income tax liabilities are "goodwill", "capital accumulation" and "income tax expense".

4. calculate and determine the current taxable income according to the applicable tax law, and confirm the result of the calculation of the taxable income and the applicable income tax rate as the current income tax, as part of the current income tax in the income tax expense that should be recognized in the profit statement.

5. determine the income tax expense in the profit statement.

The income tax expense in the profit statement includes the two components of current income tax and deferred income tax.

After calculating and determining the current income tax and deferred income tax, the sum or difference between the two is the income tax expense in the profit statement.

Note the key:

(1) how to determine the tax base of assets and liabilities;

(2) not all temporary differences can form deferred income tax assets and liabilities.

(3) in the view of balance sheet, the assets and liabilities of deferred income tax determined according to temporary differences are the balance rather than the amount incurred.

(4) the corresponding subjects of deferred income tax assets and deferred income tax liabilities are "goodwill", "capital accumulation" and "income tax expenses"; the "payable tax - income tax" corresponds to the subject of "income tax expense".