ASC 740 Part 2: Practical Application for Income Taxes Based on Income

Author: Lynn Fountain

CPE Credit:  2 hours for CPAs

ASC 740 deals with taxes based on income. There are multiple concepts to examine when discussing ASC 740. This is part two in the series that focuses on these concepts. In this course we will review concepts such as valuation allowances, changes in tax rates, changes in entity tax status, evaluating income tax accounting for financial instruments and business combinations, and accounting for uncertainty in income taxes.

In general, when a tax is based on income, most items that enter into pretax accounting income enter into taxable income in the same year, and vice versa. Some events, however, are recognized for book purposes and tax purposes in different years. Over time, as these differences reverse, they eventually offset each other. The tax effects of these differences, referred to as deferred taxes, should be accounted for in the intervening periods.

Publication Date: December 2019

Designed For
All tax professionals that want a basic understanding of ASC 740/FAS 109 concepts and the tools to prepare basic tax provisions will benefit from this course. Business owners and operational professionals, Accountants and Finance professionals and Internal auditors, Tax and Legal professionals.

Topics Covered

  • Valuation allowances and sources of taxable income
  • When is there a change in valuation allowance?
  • Changes in tax laws and rates
  • How to address changes of tax status in entity
  • Income tax accounting for financial instruments and business conbimations
  • Intra-period tax allocations
  • How to account for uncertainty in income tax

Learning Objectives

  • Identify valuation allowances and sources of taxable income
  • Recognize when there is a change in valuation allowance
  • Identify and apply changes in tax laws and rates
  • Recognize how to address changes of tax status in entity
  • Describe income tax accounting for financial instruments
  • Recognize and evaluate income tax accounting for business combinations
  • Describe intra-period tax allocations
  • Identify accounting for uncertainty in income tax
  • Differentiate types of analysis and when they are required

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
Basic understanding of ASC 740.

Advance Preparation
None

Registration Options
Quantity
Fees
Regular Fee $55.00

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