...Corporate taxation in Kenya Income Tax, or the tax on income, is charged on income of a person (individual & or Companies) for each year in accordance with section 3(1) of the Income Tax Act. S 3(1)’’..... a tax to be known as income tax shall be charged for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.’’ It is important to understand the words and phrases used in the taxation of income for easier interpretation. These include: Year of income. Year of Income is a period of 12 months commencing 1 January and ending on 31 December in each year. It is the same as calendar year. Income tax is charged for each year of income. The year of income should be distinguished from the accounting year. There is a date to which accounts of a business are prepared each year, and this date would indicate the accounting year end. The accounting year ending on 31 December would coincide with the year of income. Other accounting year-ends would however fall in a given year of income and the profit or loss per the accounts would be for that year of income. For example, an accounting date ended 30 May 2011 would fall to be treated as the year of Income 2011. (Taxable) income this is a gross income from various sources minus allowable deductions i.e. expenses incurred wholly and exclusively in the production of the income. (Taxable) person, A person whose income is taxed is either: a)...
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...National Tax Journal Vol 49 no. 3 (September 1996) pp. 421-35 CORPORATE TAX COMPLIANCE AND FINANCIAL REPORTING CORPORATE TAX COMPLIANCE AND FINANCIAL REPORTING LILLIAN F. MILLS * Abstract - The tax law provides varying opportunities for tax planning, and firms have competing incentives to consider in planning a tax reporting strategy, including financial reporting effects. I present preliminary results that Internal Revenue Service audit adjustments increase in the excess of book income over taxable income. This is evidence that firms incur additional costs for reporting higher book income than taxable income. I also investigate the relationship between compliance costs and taxes paid. Existing descriptive research emphasizes the social cost burden of such compliance costs. Preliminary results indicate that firms that spend more on tax research and planning report lower tax expense. results that proposed Internal Revenue Service (IRS) audit adjustments increase as the excess of book income over taxable income increases. This is evidence that firms incur additional costs for reporting higher financial statement income than taxable income. I also investigate how the level of conformity varies as the relative incentives for book income versus tax savings change. Tax regimes that require more conformity between book and tax accounting will likely induce higher tax payments than those firms whose incentives to maintain high book income are the greatest. In addition, government...
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...2011 Subject: Income tax treatment I appreciate that you choose me to deal with the questions for you, these are really good questions which we should pay attention to. In this memo, I would answer your questions about the specific treatment of your company’s income taxes according to my research in FASB Accounting Standard Codification and other sources. First, you ask about if the income taxes should be considered as an expense for financial reporting purpose. According to my research, I found that most accountants now agree that corporate income tax is an expense. Treating income tax as an expense is required under GAAP. This treatment is consistent with proprietary theory because the earnings that accrue to owners are reduced by corporate obligations to the government. Also, because the income tax does not result from transactions with owners, expensing corporate income tax is consistent with the SFAC No. 6 definition of comprehensive income. Thus, on the surface, accounting for income taxes would appear to be a nonissue. So for your company’s financial reporting, you should treat income taxes as an expense. Your second question is about the difference between intraperiod and interperiod tax allocation and how to differ these two, as well as the effect on financial reporting of these two methods. This is really a good question, because new start-up company would always be confused at this part. Intraperiod tax allocation method that allocates total income tax expense or benefit...
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...Courses in Accounting/Tax Research and Analysis and Accounting/Business Communications September 3, 2014 The Texas State Board of Public Accountancy requires each candidate to complete a minimum of two semester hours in accounting research and analysis or tax research and analysis from a recognized college or university. The semester hours may be obtained through a discrete course or offered through an integrated approach. If the course content is offered through integration, the college or university must advise the Board which course(s) contain the research and analysis content. Courses identified through integration must dedicate 1 semester hour, or quarter hour equivalent, to research and analysis. Courses used to meet this requirement may not be used to meet the requirement for accounting or business communications described below. Course(s) identified by a university to meet the requirements for research and analysis in accounting or taxation should primarily address the identification, organization, and integration of diverse sources of information such as authoritative literature and pronouncements, to reach a conclusion or make a decision; and should analyze accounting and taxation issues by reviewing information, using empirical data and analytical methods, recognizing data in patterned activities, forecasting, and integrating data. CPAs may be asked to conduct research and analysis when providing attest services, professional accounting services, or...
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...Personal & Corporate Taxation course is provided in the TX1 lesson summaries. To brush up on the changes to the accounting treatment of tax issues, review IAS 12 under International Financial Reporting Standards (IFRS) as well as section 3465 of the Accounting Standards for Private Enterprises (ASPE). Purpose Knowledge Horizontal and vertical thinking Ethics Legal responsibilities Income Tax Act Steps in computing income tax Source concept Distinctions Employment income versus business income Business income versus capital gain Business income versus property income Business income versus hobby Employment or office income Accounting income versus income for tax purposes Depreciation versus CCA and CECA Taxable versus non-taxable Calculating business income deductions Income from property Dividends 11/23/2014 12:12 PM Untitled Document 2 of 18 http://www.cga-education.org/2014-15/PAP/Refreshers/tx1.refresher.htm Tax integration — Corporation Tax integration — Shareholder Capital cost allowance Cumulative eligible capital amount Relationships Related Associated Connected Capital gains and losses Taxable income Tax payable by individuals Tax on split income Tax payable by a corporation Part I tax payable by a corporation Canadian controlled private corporation Manufacturing and processing profits deduction Part IV tax Refundable tax Tax planning Tax evasion Tax avoidance Areas of tax planning Residency Part XIII tax International...
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...of making various types of economic decisions. 4. Not only has internal auditor, but also has external auditor. 5. Provide the require information to external user. 1-37 Evaluate the opposing views expressed by Peters and Ferrel. For Peters, he thinks CPA should be independent from social activities. Because CPA must be fair and objective, if a CPA has closed friends, he may not be fair and objective when he does his job. So His view puts too much emphasis on independence. For Ferrel, he thinks CPA has a friendly relationship with client may decrease complications. His view pays too much attention to relationship and social activities. In my opinion, CPA is defined as a person licensed by the state to practice accounting as a profession,...
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...the institute of cost accountants of india(ICAI) (A Statutory body under an act of parliament) SYLLABUS 2012 STRUCTURE & contents Evaluation Synthesis ANALYSIS ANALYSIS APPLICATION APPLICATION COMPREHENSION COMPREHENSION COMPREHENSION KNOWLEDGE KNOWLEDGE KNOWLEDGE LEVEL A LEVEL B LEVEL C FOUNDATION COURSE - Syllabus 2012 the institute of cost accountants of india(ICAI) (A Statutory body under an act of parliament) SYLLABUS 2012 STRUCTURE & contents The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1 FOUNDATION COURSE - Syllabus 2012 The Following table lists the learning objectives and the verbs that appear in the syllabus learning aims and examination question. Learning objectives Level A COMPREHENSION What you are expected to understand List Make a list of. State Express, fully or clearly , the details/ facts of. Define Give the exact meaning of. Communicate the key features of. Distinguish Highlight the differences between. Explain Make clear or intangible/state the meaning or purpose of. Identify Recognise, establish or select after consideration. Illustrate What you are expected to know Definition Describe KNOWLEDGE Verbs used Use an example to describe or explain something. The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) ...
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...starting a business. Therefore, summarizing in a substantial way the different types of business structures that are suitable for small and medium sized business, along with describe the legal, tax, accounting, and other implications when of each form of business structure. Business Plan According to Abrams, R. (2003), “ The business plan process entails five fundamental steps: (1) Laying out your basic business concept, (2) Gathering data on the feasibility and specifics of your concept, (3) Focusing and refining the concept based on the data you compile, (4) Outlining the specifics of your business, and (5) Putting your plan in compelling form”. New Business Project Business Name: Universal ATM Service Product or Service: Retailed of Automated Teller Machines, Automated Teller Machines Products, Transactions Processing, Automated Teller Machines Placement, and Automated Teller Machines Services and Repairs. Business Structure: Limited Liability Company (LLC) Rationale for choosing this form of business organization: the founders of Universal ATM Service have opt to file as an LLC for their new business structure. Management has chosen this entity because it allows the benefit to “pass-through entities”. This will benefit the company’s owners by not been obligated to pay any income tax as a corporation, do to self employment. Another great benefit that attracted us to choosing an LLC is because it limits the liability on the owners with the...
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...Small Business Idea Katrina Le`Vere University of Phoenix ACC 561 July 17, 2012 Samuel G. Smith Introduction Starting a business requires a decision governing what form of business organization the company or corporation should operate under. This decision must be made before the business has actually begun operations. The owner must make two initial decisions in order to begin their business operation: the type of business entity to be used and where the business assets will come from. The decision depends on several factors, including the capital requirements of the business, the flexibility of management decisions, costs of formation, government restrictions, and tax considerations. Sole proprietorship, partnerships, corporations, and S-corporations are four legal forms of business organization an entrepreneur may consider when forming a business. (Sitarz, 21) Advantages and Disadvantages of the four business forms of organization The most common and simplest form of business organization is sole proprietorship. It is the least regulated of all types of business structures. Sole proprietorship is the traditional unincorporated one-person business. The advantages of sole proprietorship are: less expensive to start up, owners have full control over management decisions, owners receive the profits, and they can transfer or sell the business at their discretion. Some disadvantages to choosing sole proprietorship...
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...Cash dividends is a distribution of cash to shareholders. For a corporation to pay a cash dividend, it must have all three of the following: 1. Enough retained earnings 2. Enough cash 3. A declaration of dividends On the declaration date, a company’s board of directors formally declares the cash dividend and announces it to shareholders. ● An entry is required to recognize the increase in cash dividends and the increase in the current liability dividends payable. Example: To illustrate a cash dividend paid to preferred shareholders, assume that on December 1 the directors of Media General declare a $0.50-per-share quarterly cash dividend on the company’s 100,000, $2- noncumulative preferred share. The dividends totals $50,000 ($2 4= $0.50 X 100000) and is payable on January 23 to shareholders of record on December 30. Declaration Date Dec 1 Cash Dividends- Preferred 50,000 Dividends Payable 50,000 ● The balance in dividends payable is a current liability. On the record date, ownership of the shares is determined so that the corporation knows who to pay the dividend to. On the payment date, dividend cheques are mailed to shareholders and the payment of the dividend is recorded. Example: Payment Date Jan23 Dividends Payable 50,000 Cash 50,000 ● The cumulative effect of the declaration...
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...LO1 - Corporate Taxable Income Formula * Corps. compute gross income as do other types of business entities * Are allowed to deduct ordinary and necessary business expenditures * Don’t itemize deductions (No need for standard deductions) * No personal or dependency exemptions * Exist to generate income through business activities * Nearly all corporate expenditures create either current or future tax deductions * Corporate taxable income formula is relatively straight forward * Accounting Periods and Methods * Corporations measure their taxable income over a tax year and that their tax year must be the same as their financial accounting year * Generally elect their tax year when they file their first tax return * Timing when corps. recognize income and deductions depends on their accounting method * For tax purposes corps. have some flexibility in choosing methods of accounting for individual items or transactions. However, they are generally required to use the accrual method * Corps. with average gross receipts of $5 million or less over the three prior tax years (or a shorter period for new corporations) may use the cash method. LO2 – Computing Corporate Regular Taxable Income * Most corps starts with book income and then make adjustments for book-tax differences to reconcile to the tax numbers. * Privately held corps may use tax accounting rules for book purposes. (No adjustments required) * Book-Tax Differences ...
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...Language and Currency Legal System Advantages of Investing in Korea Constitution Economy Import Controls Major Exports and Imports Communications Finance Government Policy on Foreign Investment in Korea Exchange Controls Chapter 2–Business Forms Available to Foreign Investment • • • • • • 13 £ ¢ £ ¢ Local Corporation Establishment Private Business Registration Establishment of a Foreign Company's Domestic Branch Directors Registration requirements and filing procedures for public securities Shareholdings by non-residents Chapter 3 – Accounting • • • Business Accounting Standards Audit Policies External Audit Policy © 18 . 18 19 19 19 Introduction of the International Financial Reporting Standards § ¨ ¤ ¥ ¦ ¥ ¦ ¥ Chapter 4 – Taxation • • • • 21 21 Introduction Fiscal Year Lodgement of returns National Taxes Corporate Tax © 21 21 22 22 26 27 28 29 Personal Income Tax © Capital Gains Tax...
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...Brazilian Accounting System: Inflation, Taxation, and the Adoption of International Financial Reporting Standards Introduction As the business world evolves to a higher level of integration with the increased ability to conduct business globally, international accounting is a subject that is becoming more relevant and increasingly more important to understand. Doupnik and Perera (2012) define International accounting on three levels through the standards and guidelines of supranational organizations, at the company level, and third through the standards, rules, and guidelines that exist within each country. Brazil is one of the top five countries to be considered an emerging market (Top 30 Emerging Markets 2012-2017). It is estimated that Brazil’s GDP will grow by roughly 22.3% between the years 2013 to 2017 making the country attractive to investors (The Top 20 Emerging Markets, 2013) . Brazil ranks as one of the top 4 countries for growth in the manufacturing and industrial industries, telecommunications, technology and media, professional and business services, financial services, consumer products, pharmaceuticals and healthcare, energy and resources, automotive, chemicals, and transportation industries (Top 30 Emerging Markets 2012-2017). In addition Brazil will be a destination for world class events such as the 2014 World Cup and 2016 Olympic Games that will bring thousands of visitors to the country. As Brazil continues to grow in popularity as a location for trade...
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...academic dishonesty on this exam will be a grade of 0 for this examination. Academic dishonesty includes giving aid to or receiving aid from another student during this exam. 6. No hats. No cell phones I certify by signing below that I have neither given nor received aid in completing this examination. Signature Date I. Accounting Concepts 20 points. A. Accounting Change. ABC Company has been using specific identification inventory method. However, it has grown and has a broader array of products. The company would like to use the greater efficiency of the FIFO method on a periodic basis for financial reporting. (a) Is ABC Company allowed to change its inventory methods? Why or why not? (b) Assuming that the company is allowed to make this accounting change, what financial reporting method will the company use in making this change? prospective method retrospective method cumulative effect B. Pension Plans. Why are defined benefit pension plans recognized on a corporate balance sheet, but defined contribution pension plans are not? C....
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...Chapter 07 Foreign Currency Transactions and Hedging Foreign Exchange Risk Multiple Choice Questions 1. According to the World Trade Organization, what was the size of international trade in 2008? A) $7,000,000,000 (7 billion dollars) B) $70,000,000,000 (70 billion dollars) C) $37,000,000,000 (37 billion dollars) D) $16,000,000,000,000 (16 trillion dollars) Answer: D Level: Easy LO: 1 2. In the years between 1990 and 2001 when global gross domestic product rose 27%, what was the growth in global exports? A) 25% B) 75% C) 35% D) 50% Answer: B Level: Medium LO: 1 3. What is a “foreign exchange rate?” A) the price to buy a foreign currency B) the price to buy foreign goods C) the difference between the price of goods in a foreign currency and the price in a domestic currency D) the cost to hold all monetary assets in a single currency Answer: A Level: Easy LO: 1 4. Why was there very little fluctuation in the foreign exchange rate in the period 1945-1973? A) This was a period when the world economy was very stable. B) There was very little growth in the world economy between 1945 and 1973. C) Countries linked their currency to the U.S. dollar, which was backed by gold reserves. D) Most currencies were pegged to the British...
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