Intermediate Accounting (2nd Edition)
Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
Question
Chapter 17, Problem 17.1Q
To determine

To explain: The difference in objectives of GAAP accounting and tax accounting methods.

Expert Solution & Answer
Check Mark

Answer to Problem 17.1Q

The income tax expenditure shown on financial statements of the company does not similar to the income taxes paid in actual by the company during the year. This difference arises because of the difference in objectives of GAAP (Generally accepted accounting principles) and the tax accounting.

Explanation of Solution

GAAP Accounting

Generally accepted accounting principles includes the set of accounting standards, principles and procedures that is followed by the companies for final report of financial statements.

Tax Accounting:

Tax Accounting includes accounting methods and principles related to taxation rather than for report of financial statements of the company.

There is a difference in objectives of GAAP accounting and the Tax accounting. The main objective of GAAP accounting is to provide information related to the financial statements of the companies. In contrast to this, Tax accounting focuseson maximization of the tax revenue, achieve economic objectives and promote social objectives.

Conclusion

The income tax expense and the income tax payable are not same due to the difference in objectives of GAAP accounting and Tax accounting.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 17 Solutions

Intermediate Accounting (2nd Edition)

Ch. 17 - Prob. 17.11QCh. 17 - Prob. 17.12QCh. 17 - Prob. 17.13QCh. 17 - How does an entity account for uncertain tax...Ch. 17 - Prob. 17.15QCh. 17 - Prob. 17.16QCh. 17 - Do U.S. GAAP and IFRS classify deferred tax...Ch. 17 - Prob. 17.18QCh. 17 - Cavan Company prepared the following...Ch. 17 - Prob. 17.2MCCh. 17 - Prob. 17.3MCCh. 17 - Prob. 17.4MCCh. 17 - Prob. 17.5MCCh. 17 - Prob. 17.6MCCh. 17 - Prob. 17.7MCCh. 17 - Prob. 17.1BECh. 17 - Income Taxes Payable. Limmox Company has...Ch. 17 - Permanent Differences. Simmox Company's income...Ch. 17 - Permanent Differences. Plimmox Company's income...Ch. 17 - Permanent Differences, Reconciliation of Statutory...Ch. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Temporary Differences, Deferred Tax Liability....Ch. 17 - Temporary Differences. Deferred Tax Asset....Ch. 17 - Temporary Differences, Deferred Tax Asset. Using...Ch. 17 - Prob. 17.14BECh. 17 - Realizability of Deferred Assets. Maves, Inc....Ch. 17 - Prob. 17.16BECh. 17 - Change in Tax Rates. Finer Shoes Company recorded...Ch. 17 - Change in Tax Rates, IFRS. Use the same...Ch. 17 - Prob. 17.19BECh. 17 - Prob. 17.20BECh. 17 - Prob. 17.21BECh. 17 - Prob. 17.22BECh. 17 - Prob. 17.23BECh. 17 - Prob. 17.24BECh. 17 - Prob. 17.25BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Change in Tax Rates, Permanent Difference,...Ch. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - Net Operating Loss, Carryback. Phlash Photo Labs,...Ch. 17 - Net Operating Loss, Carryforward. Loggins Lumber...Ch. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Net Operating Loss, Carryforward, Tax Rate Change....Ch. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Uncertain Tax Positions. Lewis Eagle Corporation...Ch. 17 - Uncertain Tax Positions. Based on the information...Ch. 17 - Prob. 17.1PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Temporary Differences, Deferred Tax Liabilities....Ch. 17 - Prob. 17.4PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.6PCh. 17 - Net Operating Loss, Carryback, Carryforward,...Ch. 17 - Prob. 17.8PCh. 17 - Net Operating Loss, Carryback. Carryforward. CPF...Ch. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Permanent Differences, Temporary Tax Differences,...Ch. 17 - Prob. 1JCCh. 17 - Prob. 2JCCh. 17 - Prob. 1FSCCh. 17 - Prob. 1SSCCh. 17 - Prob. 2SSCCh. 17 - Prob. 3SSCCh. 17 - Scene 1: The concept of the deferred tax liability...Ch. 17 - Basis for Conclusions Case 2: Uncertain Tax...
Knowledge Booster
Recommended textbooks for you
  • Income Tax Fundamentals 2020
    Accounting
    ISBN:9780357391129
    Author:WHITTENBURG
    Publisher:Cengage
    Intermediate Accounting: Reporting And Analysis
    Accounting
    ISBN:9781337788281
    Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
    Publisher:Cengage Learning
    CONCEPTS IN FED.TAX., 2020-W/ACCESS
    Accounting
    ISBN:9780357110362
    Author:Murphy
    Publisher:CENGAGE L
  • Individual Income Taxes
    Accounting
    ISBN:9780357109731
    Author:Hoffman
    Publisher:CENGAGE LEARNING - CONSIGNMENT
    SWFT Comprehensive Volume 2019
    Accounting
    ISBN:9780357233306
    Author:Maloney
    Publisher:Cengage
    SWFT Comprehensive Vol 2020
    Accounting
    ISBN:9780357391723
    Author:Maloney
    Publisher:Cengage
  • Income Tax Fundamentals 2020
    Accounting
    ISBN:9780357391129
    Author:WHITTENBURG
    Publisher:Cengage
    Intermediate Accounting: Reporting And Analysis
    Accounting
    ISBN:9781337788281
    Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
    Publisher:Cengage Learning
    CONCEPTS IN FED.TAX., 2020-W/ACCESS
    Accounting
    ISBN:9780357110362
    Author:Murphy
    Publisher:CENGAGE L
    Individual Income Taxes
    Accounting
    ISBN:9780357109731
    Author:Hoffman
    Publisher:CENGAGE LEARNING - CONSIGNMENT
    SWFT Comprehensive Volume 2019
    Accounting
    ISBN:9780357233306
    Author:Maloney
    Publisher:Cengage
    SWFT Comprehensive Vol 2020
    Accounting
    ISBN:9780357391723
    Author:Maloney
    Publisher:Cengage