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Track 12 of 19 · Specialized

Income taxes under ASC 740 for auditors

How ASC 740 measures current and deferred income taxes: temporary differences, enacted rates, valuation allowances, uncertain tax positions, intraperiod allocation, interim reporting and the ASU 2023-09 disclosures, followed by how an audit team tests the tax provision.

14 lessonsAbout 61 minASC 740 · ASU 2019-12 · ASU 2023-09 · AU-C 540
0 of 14 complete
Syllabus

For: Audit staff and seniors who test the tax provision, and tax staff who prepare provision workpapers.

  1. 01Current and deferred tax: the asset and liability methodHow ASC 740 builds total tax expense from current tax payable and the change in deferred tax assets and liabilities, measured at enacted rates.4 min · worked example · 4 self-check questions
  2. 02Temporary differences versus permanent differencesHow to tell a temporary difference from a permanent one, why only temporary differences create deferred taxes, and how each moves the effective rate.4 min · worked example · 4 self-check questions
  3. 03The rate reconciliation under ASU 2023-09The eight required rate reconciliation categories, the 5 percent disaggregation threshold, private company rules and effective dates under ASU 2023-09.4 min · worked example · 4 self-check questions
  4. 04The valuation allowance and the four sources of taxable incomeWhen a deferred tax asset needs a valuation allowance, how to weigh positive and negative evidence, and how the four sources of taxable income set the amount.4 min · worked example · 4 self-check questions
  5. 05Uncertain tax positions: recognition and measurementThe two-step model from Interpretation 48: recognize positions that are more likely than not to be sustained, then measure the largest amount over 50 percent likely.4 min · worked example · 4 self-check questions
  6. 06The interim tax provision and the estimated annual effective rateHow ASC 740-270 applies an estimated annual effective tax rate to year-to-date ordinary income and records discrete items in the quarter they occur.5 min · worked example · 4 self-check questions
  7. 07Intraperiod tax allocation after ASU 2019-12How ASC 740-20 splits total tax expense among continuing operations, discontinued operations, OCI and equity using the incremental approach.4 min · worked example · 3 self-check questions
  8. 08Income taxes in business combinationsDeferred taxes on acquired assets and liabilities, the goodwill exception, acquired valuation allowances, the acquirer's own allowance and acquired tax uncertainties.5 min · worked example · 4 self-check questions
  9. 09Tax effects of stock compensation under ASC 718-740How deferred tax assets follow book compensation cost, why ISOs differ from nonqualified awards, and where excess tax benefits and deficiencies go after ASU 2016-09.4 min · worked example · 4 self-check questions
  10. 10State income taxes, franchise taxes and PTET electionsWhich state taxes fall under ASC 740, measuring state deferred taxes with apportionment, franchise taxes partly based on income, and PTET in entity statements.5 min · worked example · 4 self-check questions
  11. 11GILTI, net CFC tested income and foreign earningsThe GILTI policy election, the 2025 shift to net CFC tested income, foreign subsidiary outside basis differences and cross-border rate reconciliation items.5 min · worked example · 4 self-check questions
  12. 12Income tax disclosures under ASC 740-10-50The income tax note after ASU 2023-09: expense components, temporary differences, carryforwards, taxes paid, pretax income split and uncertain tax positions.4 min · worked example · 4 self-check questions
  13. 13Auditing the tax provision: AU-C 540 estimates and AU-C 620 tax specialistsHow AU-C 540 shapes risk assessment and testing of tax estimates, when a tax professional is an auditor's specialist under AU-C 620, and what AU-C 9500 adds.5 min · worked example · 4 self-check questions
  14. 14Common tax provision misstatements and audit deficienciesThe provision errors that recur in practice and the audit file gaps behind them: unsupported balances, wrong rates, weak allowance analysis, UTP and interim mistakes.4 min · worked example · 4 self-check questions
For US CPA firms

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