The taxable income of a corporation is usually calculated differently for tax and financial statement purposes. These differences in reporting can be permanent or due to timing. A permanent difference is caused by a different treatment of a revenue or an expense. For example, certain types of revenue may not be taxable, and certain allowable deductions may not be actual expenses. Timing differences commonly occur when sales are made on an installment basis, or revenue is earned from long-term projects, and when the depreciation methods use for tax and financial statement purposes differ. Corporations in such circumstances tend to accelerate expenses, and defer income to future years when reporting for tax purposes. The opposite approach is taken when accounting for financial statements.
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ALLOCATING INCOME TAXES BETWEEN PERIODS
- Front Matter
- Body Matter
- Back Matter