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Generally accepted auditing standards 3.2

#Generally accepted auditing standards 3.2 full

There also may be differences between the tax bases and the recognized values of assets acquired and liabilities assumed in an acquisition by a not-for-profit entity or between the tax bases and the recognized values of the assets and liabilities carried over to the records of a new entity formed by a merger of not-for-profit entities. There may be differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination.

Business combinations and combinations accounted for by not-for-profit entities (NFPs).

Amounts received upon future recovery of the local currency historical cost of the asset will be less than the remaining tax basis of the asset, and the difference will be tax deductible when the asset is recovered. The inﬂation-adjusted tax basis of the asset would be used to compute future tax deductions for depreciation or to compute gain or loss on sale of the asset. The tax law for a particular tax jurisdiction might require adjustment of the tax basis of a depreciable (or other) asset for the effects of inﬂation.

An increase in the tax basis of assets because of indexing whenever the local currency is the functional currency.

Amounts received upon future recovery of the reduced cost of the asset for ﬁnancial reporting will be less than the tax basis of the asset, and the difference will be tax deductible when the asset is recovered. Under the deferral method as established in paragraph 740-10-25-46, investment tax credits are viewed and accounted for as a reduction of the cost of the related asset (even though, for ﬁnancial statement presentation, deferred investment tax credits may be reported as deferred income).

Investment tax credits accounted for by the deferral method.

#Generally accepted auditing standards 3.2 full

For example, a tax law may provide taxpayers with the choice of either taking the full amount of depreciation deductions and reduced tax credit (that is, investment tax credit and certain other tax credits) or taking the full tax credit and reduced amount of depreciation deductions. Amounts received upon future recovery of the amount of the asset for ﬁnancial reporting will exceed the remaining tax basis of the asset, and the excess will be taxable when the asset is recovered.

A reduction in the tax basis of depreciable assets because of tax credits.

The cost of an asset (for example, depreciable personal property) may have been deducted for tax purposes faster than it was depreciated for ﬁnancial reporting.

Expenses or losses that are deductible before they are recognized in ﬁnancial income.

Future sacriﬁces to provide goods or services (or future refunds to those who cancel their orders) will result in future tax deductible amounts when the liability is settled. For tax purposes, the advance payment is included in taxable income upon the receipt of cash. A liability (for example, subscriptions received in advance) may be recognized for an advance payment for goods or services to be provided in future years. Revenues or gains that are taxable before they are recognized in ﬁnancial income.A liability (for example, a product warranty liability) may be recognized for expenses or losses that will result in future tax deductible amounts when the liability is settled.

Expenses or losses that are deductible after they are recognized in ﬁnancial income.An asset (for example, a receivable from an installment sale) may be recognized for revenues or gains that will result in future taxable amounts when the asset is recovered. Revenues or gains that are taxable after they are recognized in ﬁnancial income.Based on that assumption, a difference between the tax basis of an asset or a liability and its reported amount in the statement of ﬁnancial position will result in taxable or deductible amounts in some future year(s) when the reported amounts of assets are recovered and the reported amounts of liabilities are settled. Transfers and servicing of financial assetsĪn assumption inherent in an entity’s statement of ﬁnancial position prepared in accordance with generally accepted accounting principles (GAAP) is that the reported amounts of assets and liabilities will be recovered and settled, respectively. Revenue from contracts with customers (ASC 606) Loans and investments (post ASU 2016-13 and ASC 326) Investments in debt and equity securities (pre ASU 2016-13) Insurance contracts for insurance entities (pre ASU 2018-12)

Insurance contracts for insurance entities (post ASU 2018-12) IFRS and US GAAP: Similarities and differences Business combinations and noncontrolling interestsĮquity method investments and joint ventures