What Is Ad Hoc Analysis?

Temporary difference is the difference between the tax base of an asset or a liability and its carrying amount shown on the accounting statements, and refers to the difference between the tax base of an asset or a liability and its carrying amount in the balance sheet The difference will result in taxable income or deductions when assets are recovered or liabilities are repaid in subsequent accounting periods. Unlike temporal differences, the definition of temporary differences is from the perspective of a balance sheet.

Temporary difference

Right!

Temporary difference is the difference between the tax base of an asset or a liability and its carrying amount shown on the accounting statements, and refers to the difference between the tax base of an asset or a liability and its carrying amount in the balance sheet The difference will result in taxable income or deductions when assets are recovered or liabilities are repaid in subsequent accounting periods. Unlike temporal differences, the definition of temporary differences is from the perspective of a balance sheet.

Chinese name

Temporary difference

Category 1

Temporary differences are recovered in the subsequent years when the assets listed on the accounting statements are recovered. Or when the listed liabilities are repaid, taxable amounts or deductions will be incurred.

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The new "Enterprise Accounting Standards No. 18-Income Tax" (hereinafter referred to as the "Standards") issued by the Ministry of Finance has completely changed the original income tax accounting treatment method. Previously, enterprises could use the tax payable method and tax impact accounting method (including deferred method or debt method) to calculate income tax. The debt method here is the income statement debt method. The "Standards" explicitly abolished the previous accounting methods, requiring enterprises to adopt the balance sheet debt method to calculate deferred income tax.

The balance sheet debt method has expanded the scope of accounting for reversible differences. The previous income statement debt method only accounted for temporal differences and could not handle temporary differences other than non-temporal differences. The balance sheet debt method can account for all temporary differences, including differences that can be reversed except time differences and non-time differences. Under this method, the deferred income tax assets and deferred income tax liabilities directly obtained can directly reflect their impact on the future.

The Guidelines propose the concept of the tax base of assets and liabilities. The temporary difference is defined as the difference between the book value of the asset or liability and its tax base, and is divided into Temporary tax differences and deductible temporary differences, and the first time that eligible deductible losses and tax deductions are recognized as deferred income tax assets are also significant breakthroughs in income tax accounting.

The following example analyzes the accounting treatment of income tax and related tax adjustments when there are temporary differences.

Generally, if there are temporary differences in taxable income or deductible temporary differences, deferred income tax liabilities or deferred income tax assets should be recognized in accordance with the provisions of the Guidelines.

Example: On December 25, 2010, Enterprise A purchased a device worth 80,000 yuan that does not need to be installed. The equipment is expected to be used for 4 years, and depreciation is calculated on a straight-line basis in accounting, without residual value. It is assumed that the tax law provides for depreciation using the sum of years method and no residual value. Company A's total annual profit is 100,000 yuan, without other tax adjustment items, and the income tax rate is 30%.

In 2011, the accounting depreciation was 20,000 yuan (80,000 ÷ 4), and the book value of the equipment was 60,000 yuan (80,000-20,000). The tax was depreciated by 32,000 yuan [80000 × 4 ÷ (1 + 2 + 3 + 4). ], The tax base of the equipment is 48,000 yuan (80,000-32,000). The difference between the book value of the equipment and the taxable basis of 12,000 yuan (60,000-48,000) is a taxable temporary difference, and a deferred income tax liability of 3600 yuan (12000 × 30%) should be recognized. In 2011, corporate income tax payable was 26,400 yuan {[100000 (3200020000)] × 30%}.

Borrow: Income tax 30000

Loan: Tax payable-income tax payable 26400

Deferred income tax liabilities 3600

In 2012, accounting for 20,000 yuan depreciation and equipment book value of 40,000 yuan; taxation of 24,000 yuan depreciation [80000 × 3 ÷ (1 + 2 + 3 + 4)], equipment tax basis is 24,000 yuan (48000-24000). The difference between the book value of the equipment and the tax base is 16,000 yuan (40,000-24,000), which is the accrued taxable temporary difference. At the end of 2012, the balance of deferred income tax liabilities that should be retained is 4,800 yuan (16000 × 30%) At the beginning of the year, the balance is 3,600 yuan, and the deferred income tax liability should be re-confirmed 1,200 yuan (4800-3600). In 2012, corporate income tax payable was 28,800 yuan {[100000-(24000-20,000)] × 30%}.

Borrow: Income tax 30000

Loan: Taxes payable-income tax payable 28800

Deferred income tax liabilities 1200

In 2013, the accounting depreciation was 20,000 yuan, and the book value of the equipment was 20,000 yuan. The tax depreciation was 16,000 yuan [80000 × 2 ÷ (1 + 2 + 3 + 4)], and the equipment's tax basis was 8,000 yuan. (24000-16000). The difference between the book value of the equipment and the tax base is 12,000 yuan (20,000-8000), which is a cumulative taxable temporary difference that should be recognized. At the end of 2013, the balance of deferred income tax liabilities that should be retained is 3600 yuan (12000 × 30%). At the beginning of the year, the balance was 4,800 yuan, and the deferred income tax liability should be reversed to 1,200 yuan (4800-3600). In 2013, the enterprise income tax payable was 31200 yuan {[100000+ (20000-16000)] × 30%}

Borrow: Income tax 30000

Deferred income tax liabilities 1200

Loan: Tax payable-income tax payable 31200

In 2014, the accounting depreciation was 20,000 yuan, and the book value of the equipment was 0; the tax depreciation was 8,000 yuan [80000 × 1 ÷ (1 + 2 + 3 + 4)], and the equipment's tax basis was 0 (8000 -8000). The difference between the book value of the equipment and the tax base is 0. At the end of 2014, the balance of deferred income tax liabilities that should be retained is also 0. The balance at the beginning of the year is 3600 yuan, and the deferred income tax liability should be reversed to 3600 yuan. In 2014, the enterprise income tax payable was 33,600 yuan {[100000+ (20000-8000)] × 30%}

Borrow: Income tax 30000

Deferred income tax liabilities 3600

Loan: Tax payable-Income tax payable 33600