Income taxes - part 2
Taught by James Griffiths · AI tutor support included
You'll learn how deferred tax arises from timing differences between accounting and taxable profit, and how to calculate and recognise deferred tax liabilities in your financial statements.
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In this lesson
- 0:00 Introduction to deferred tax accounting
- 0:16 Temporary differences: taxable vs accounting profit
- 0:42 Depreciation versus capital allowances
- 2:14 Accounting base and tax base terminology
- 3:09 Calculating the timing difference
- 5:01 Worked example: deferred tax liability calculation
- 7:41 Recognising deferred tax in financial statements
About this lesson
This video focuses on non-current assets, where depreciation (accounting) differs from capital allowances (tax), creating a temporary difference that must be accounted for. You'll work through the key concept of accounting base versus tax base, then apply a practical example to calculate the deferred tax liability using the formula: (accounting base − tax base) × tax rate. This is essential for Financial Reporting and Advanced Financial Reporting papers, where deferred tax is a core component of financial statement preparation.
Duration: 9m
Transcript
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