Chris Green, CPA, is auditing Rayne Co.'s 2016
financial statements. For the year ended December 31, 2016, Rayne
is applying GAAP for income taxes. Rayne's controller, Dunn, has
prepared a schedule of all differences between financial statement
and income tax return income. Dunn believes that as a result of
pending legislation, the enacted tax rate at December 31, 2016,
will be increased for 2017. Dunn is uncertain which differences to
include and which rates to apply in computing deferred taxes. Dunn
has requested an overview of GAAP from Green.
Required:
Prepare a brief memo to Dunn from Green that identifies the objectives of accounting for income taxes, defines temporary differences, explains how to measure deferred tax assets and liabilities, and explains how to measure deferred income tax expense or benefit
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