.

Taxable income is a tax accounting term and is also referred to as income before
taxes.
2.
Pretax financial income is the amount used to compute income tax payable.
3.
Taxable amounts increase taxable income in future years.
4.
A deferred tax liability represents the increase in taxes payable in future years as a
result
of taxable temporary differences existing at the end of the current year.
5.
Deductible amounts cause taxable income to be greater than pretax financial income
in
the future as a result of existing temporary differences.
6.
A deferred tax asset represents the increase in taxes refundable in future years as a
result
of deductible temporary differences existing at the end of the current year.
7.
A company reduces a deferred tax asset by a valuation allowance if it is probable
that it
will not realize some portion of the deferred tax asset.
8.
Companies should consider both positive and negative evidence to determine
whether it
needs to record a valuation allowance to reduce a deferred tax asset.
9.
A company should add a decrease in a deferred tax liability to income tax payable in
computing income tax expense.
10.
Taxable temporary differences will result in taxable amounts in future years when the
related assets are recovered.
11.
Examples of taxable temporary differences are subscriptions received in advance
and
advance rental receipts.
12.
Permanent differences do not give rise to future taxable or deductible amounts.
13.
Companies must consider presently enacted changes in the tax rate that become
effective
in future years when determining the tax rate to apply to existing temporary
differences.
14.
When a change in the tax rate is enacted, the effect is reported as an adjustment to
income tax payable in the period of the change.
15.
Under the loss carryback approach, companies must apply a current year loss to the
most
recent year first and then to an earlier year.
16.
The tax effect of a loss carryforward represents future tax savings and results in the
recognition of a deferred tax asset.
17.
A possible source of taxable income that may be available to realize a tax benefit for
loss
carryforwards is future reversals of existing