Deferred Tax Essay Example

Deferred Tax Essay Example Deferred Tax Essay Deferred Tax Essay Financial statements The article Its time to simplify tax financial reporting was written by Terry J. Ward in the year 1996. The article was published on November 11 in the Audit and Accounting Forum section in the newspaper the Accounting Today. It focuses on controversies that surrounded the reporting of income tax on financial statements. For example, in early 1950, there was an argument that suggested that companies should allocate an amount of income tax expense across accounting periods to account for timing differences between reported and taxable income. The Financial Accounting Standards Board issued Statement 109 that required assets and liabilities to interperiod income tax allocation (Ward, 1996). The statement was not operational because one could neither verify nor disprove any revenue tax distribution and it was not useful to investors or lenders. Studies have shown that deferred tax allocation reduces the usefulness of accounting information because it violates the costs and benefits cons train principles. The Flow-through approach is simple and saves companies the additional record keeping cost associated with deferred tax allocation (Ward, 1996). Reporting of income tax should be simplified, useful to all parties that use and meet all the standards of the FASB. The reporting of income tax should me be simplified (Ward, 1996). Reporting deferred tax in the financial statement is not simple because of it is complex and not logic to estimate taxable or deductible amount in future years. For example, only deferred tax expense is presented in the Income Statement while in the Balance Sheet two categories are presented that is net current and net non-current amount. Moreover, it not logic to use losses of past years to offset the profit of another year as per the use of loss carryback and loss carryforward. Therefore, a person cannot tell what the future holds only God knows. Estimate the net operating loss is difficult because two years are carried back and twenty years are passed forward. Deferred tax violates the cost and benefit constraints standards of the FASB (Ward, 1996). Tax benefit realization will be limited if loses carried back or carried forward period is brief. Moreover, if the significant deductible temporary difference is expected to reverse in a single year or when the enterprise operates in a traditionally cyclical business, these factors will also limit the realization of tax benefit. Additionally, the unsettled circumstances that are unfavorably resolved will adversely affect the forthcoming operation and profit level on continuing basis in the future. Financial reporting Accounting for income tax is not of any importance to its various users especially the lenders and investors (Ward, 1996). Creditors and investors are not interested in the future information of the company but are rather interested in how the firm has been and is performing in their decision making. Moreover, core aspects are left behind while computing the income tax. For example, according to IFRS, some potential liabilities are not recognized whereas, GAAP uses an impairment approach for deferred tax asset. Also, it is hard for some uninformed investors or lenders to understand the deferred tax while presented in the various books of record. I agree with the writers opinion that financial reporting should be simplified. Simplified financial reporting will ensure that people are able to compute and understand the financial information. Different approaches should be established to protect the various firms in the industry. For example, small companies should use the simplest method available. I believe when reporting financial information relevant information concerning the business should be presented to the appropriate people as per the FASB principles. References Ward, J. T. (1996 November 11). Its time to simplify tax financial reporting. Accounting Today. Page 18-19

Cavaliers and Roundheads essays

Cavaliers and Roundheads essays Two different political groups, the Cavaliers and Roundheads fought for power during the 17th century civil war in England. The Cavaliers put their support behind the king, Charles I. They believed that one man with direction would be better and less confusing then many men fighting over the fate of the country. The Roundheads supported the Parliament, and did not believe that an absolute monarch should run the country. They thought one person having the say over everything would be a good idea. Cavaliers, also called royalist, did not believe the parliament should have power. They were Roman Catholic as opposed to the Roundheads, who were Protestants. Their fashionable wigs differed greatly then the fashion of the Roundheads. The word Cavalier stands for gallant and haughty. No great leader existed like Cromwell proved to be for the Roundheads. The Roundheads, also known as Parliamentarians, opposed the Cavaliers, and they supported the Parliament. Their name referred to the short haircuts that they wore. They did not care about being fashionable like the Cavaliers. The stern and successful Oliver Cromwell led the Roundheads. However, upon his death in 1658 the Roundheads slowly fell in power thanks to Olivers son, Richard. The Cavaliers and the Roundheads fought over power during the 17th century. Initially, The Roundheads won thanks to the tactics of Cromwell. Over 3,000 Roman Catholics died in one battle. However, after the death of Cromwell, his son proved unworthy of power. The Parliament restored Charles II as king. Many differences existed between the two political parties. The Cavaliers stayed on the side of the king, and the Roundheads stayed on the side of the parliament. Much fighting occurred, but in the end not too much got accomplished. Cromwell actually refused the crown, but still had won the battles. After his death, The Cavaliers restored power to King Char...

The Irish Famine Essay Example | Topics and Well Written Essays - 1500 words

The Irish Famine - Essay Example The famine, which is also referred to as The Great Hunger, and The Bad Life, and its impact was terrible in terms of demographic decline, triggering off the mass emigration. From a prominent exporter of food, Ireland was reduced to the most unenviable position with its people, leaving the homeland, dying under deplorable conditions on the way to England, Scotland or America or any country that they could find a way to. Ograda writes the book with the intention of providing 'fresh perspectives by an explicitly interdisciplinary and comparative approach comparing the Irish famine with the Third World Famines'. He says one of the main differences between the two is while Irish famine killed people in a large scale and other famines did not, at least not to that extent, though all famines produce individual tragedies. Unlike today's famines that usually happen in the impoverished areas, Irish famine was in the prosperous hub, which Prince Albert called 'the workshop of the world'. (p.5). The pleas for help were treated with the philosophical context, when the Economist answered the requests with a curt "It is no man's business to provide for another.' (p. 6). It was also treated as a natural retribution that the Irish should suffer as a penance. "Many people in high places in both London and Dublin in the 1840s believed that the famine was nature's response to Irish demographic irresponsibility, and t oo much public kindness would obscure that message" (p.6). Potato had been cultivated more as a garden crop in Ireland and an average yield of approximately 6 tons per acre was recorded just before the famine. It was believed that Ireland was highly suitable for potato cultivation due to its acidic soil, damp, temperate climate. When the famine happened, the country was unprepared to a calamity of that scale, and landlords most of them living in England, belonging to the noble cause, could not, or did not do enough to help their farmers. Even though this is the popular conception, Ograda argues that most landlords themselves were insolvent and they were not in a position to help their tenants. During the famine, a large number of landlords lost their ownership of the land. There were other problems like over-cultivation of a rage of potato varieties, adverse consequences of industrial revolution, confiscation of the land in the earlier centuries that left the ownership in the hands of British landlords etc. When famine started and the early deaths were reported, the official reaction was to call for the verification of deaths. An enormous crisis was simmering and by late 1840s 'famine symptoms of wandering beggars, roadside deaths, rising crime rates, poorly attended burials, widespread panic about contagion, and mass evictions were commonplace throughout most of the country'. The situation raged for another five years, unabated and Ograda says that the long-lasting nature of the famine led to compassion fatigue and charitable donations dropped steadily while land clearance and emigration reached a massive scale. Prevention strategies included initially identifying the most vulnerable poor and help them through the relief committees established by the Poor Relief (Ireland) Act of 1838. Admission into the workhouses rose ominously; but the representatives of Board of Guardians refused more money for relief measures. Relief Commissioners and