9
Financial Statement AnalysisModule 9 of 9

Analysis of Income Taxes

6

Concepts

3

Formulas

1

Decisions

3

Quiz Questions

Explore the Learning Dashboard

Go to the CFA Level 1 Financial Statement Analysis hub

Key Concepts

6 concepts covered in this module.

Taxable vs Accounting Income

Accounting income follows GAAP/IFRS; taxable income follows tax law. Differences can be temporary or permanent.

Temporary Differences

Reverse over time. Taxable temporary diff → DTL. Deductible temporary diff → DTA. Example: accelerated tax depreciation.

Study dashboard+4 more concepts

The complete set of concepts for this module lives in the study dashboard, alongside flashcards, quizzes, mind maps and progress tracking.

Open in Dashboard

Formulas

3 essential formulas for this module.

Tax Expense

Tax Expense = Taxes Payable + ΔDTL - ΔDTA

Where: Income statement tax charge

Effective Tax Rate

ETR = Tax Expense / Pre-tax Income

Where: Actual rate after all adjustments

Study dashboard+1 more formula

The complete set of formulas for this module lives in the study dashboard, alongside flashcards, quizzes, mind maps and progress tracking.

Open in Dashboard

Decision Frameworks

1 decision frameworks to guide your analysis.

Will a DTL actually reverse?

  • If company is shrinking: DTL will reverse (tax payment due)
  • If growing: DTL may never reverse (new DTLs replace old ones)

Mind Map

Visual overview of how concepts connect in this module.

See the full mind map in the study dashboard

The interactive mind map for this module lives in the study dashboard, alongside flashcards, quizzes and progress tracking.

Open in Dashboard
Practice This Topic

Don't just read Analysis of Income Taxes — practice it

Try 5 sample flashcards and one quiz question here for free. This module's full flashcard deck and quiz live on the study dashboard.

  • 10 interactive flashcards built from this page
  • 3 exam-style quiz questions with instant scoring
  • Progress tracking across all 9 Financial Statement Analysis modules
Open This Module in the Dashboard

No signup needed to look around. Create a free account to save your progress.

Try it right here

Flashcard

Taxable vs Accounting Income

Tap to reveal the answer

Answer
Accounting income follows GAAP/IFRS; taxable income follows tax law. Differences can be temporary or permanent.
Sample 1 of 5
Study all 10 flashcards in the dashboard

Previous Module

Topics in Long-Term Liabilities and Equity