Page 46 - FINAL CFA I SLIDES JUNE 2019 DAY 8
P. 46
Session Unit 8:
30. Income Taxes
LOS 30.f: Distinguish between temporary and permanent differences in pre-tax accounting income
and taxable income. p.254
A temporary difference (which can be taxable or deductible) refers to a difference between the tax base and
the carrying value of an asset or liability that will result in (reversible) taxable amounts or deductible amounts
in the future.
A permanent difference is a difference between taxable income and pre-tax income that will not reverse in the
tanties
future; they cause the firm’s effective tax rate to differ from the statutory tax rate.
