Balance Sheet and Deferred Tax

As discussed above, if indicators of impairment exist for an asset (group) to be held and used, an entity determines whether the sum of the estimated undiscounted future cash flows attributable to the asset (group) in question is less than its carrying amount. If those undiscounted cash flows are less than

According to AASB 112, main principal of tax effect is to recognize deferred tax asset or deferred tax liability if it is probable that future recovery or settlement of asset or liability makes future tax payments larger or smaller. Requirements are to separately disclose main parts of tax expense, aggregate current and deferred tax relating to items recognized directly in equity, information demonstrating a relationship between tax expense & company’s accounting profit, and certain information relevant to temporary differences and deferred tax assets.

* Under ASC 805-740, a change in an acquirer’s valuation allowance for a deferred tax asset that results from a change in the acquirer’s circumstances caused by a business combination…

Once a gain or loss is recognized, a taxpayer must determine how the recognized gain or loss affects the taxpayer’s tax liability. The character depends on a combination of two factors: purpose or use of the asset and holding period. The purpose or use of the asset is important because the law does not treat all assets equally. The general use categories are: (1) trade or business, (2) for the production of income (rental activities), (3) investment, and (4) personal. Based on these criteria, we can categorize an asset into one of three groups: (1) ordinary, (2) capital, or (3) section 1231. Characterizing the gain or loss is important because all gains and losses are not equal. Ordinary gains and losses are taxed at ordinary income rates, regardless of the holding

eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount

A deferred tax liability is recognized for temporary differences that will result in taxable amounts in future years. In Packer, Inc’s case, depreciation has been recognized as deferred tax liabilities. Packer uses straight-line depreciation, for tax purposes, the cost of the depreciable recourses may have been deducted faster than that for financial reporting purposes.

An assumption inherent in an enterprise 's statement of financial position prepared in accordance with generally accepted accounting principles is that the reported amounts of assets and liabilities will be recovered and settled, respectively. Based on that assumption, a difference between the tax basis of an asset or a liability and its reported amount in the statement of

10. Fixed asset turnover = Total Revenues in Statement of Operations / Net Property and

The fair value of an asset is defined as ‘the price that would be received to sell an asset paid to transfer a liability in an orderly transaction between market participants at the measurement date” (Kieso, Weygandt, & Warfield, 2012). It is a market based measure (Averkamp, 2014). Over the past few years, Generally Accepted Accounting Principles has called for the use of fair value measurement in a company’s financial statements. This is what is referred to as the fair value principle (Kieso, Weygandt, & Warfield, 2012). The fair value of an asset or liability is based on an estimate of what the asset should be worth at the time of sale. This gives rise to some conflict among accounting professionals. It is believed that fair value may not be as accurate

Accordingly, based on the two types of evidences mentioned above, the views of the SEC staff with respect to valuation allowances on deferred tax assets and the types of questions that they might ask if they reviewed the Lucent’s financial reports are as follows;

The following report will investigate the Australian retail/grocery supermarket Woolworths and its parent company Woolworths Limited. This report will explore the success Woolworths and its contribution to the Australian economy.

which are added to pro forma total current assets which yield pro forma total assets. The next section deals with liability. It begins with pro forma accounts payable which is determined by figuring out how much a company will spend on bills and previous purchased supplies. Next is the pro forma accrued payroll, which is easy to determine after establishing salaries. The pro forma notes payable is notes payable within one year. Pro forma total current liabilities are calculated by adding pro forma accounts payable, accrued payroll, and notes payable. Proceeding this, pro forma long term liabilities are calculated which may include things such as pro forma mortgage note payable. Combining pro forma long term liabilities and pro forma current liabilities will provide pro forma total liabilities. The last section of the pro forma balance sheet is pro forma owner’s equity, which includes pro forma common stock and pro forma retained earnings.

* To reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination if the acquirer’s interest in the net fair value of the items recognised exceeds the cost of the combination. Any excess remaining after that reassessment must be recognised by the acquirer immediately in profit or loss.

deducted from the list of liabilities plus the amount of capital. The positive difference is the net

In determining the present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liability, is used.