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welcome back to our accounting Channel today weamp;#39;re diving into ASC 740 the accounting standards codification that deals with income taxes ASC 740 requires companies to account for the effects of income taxes on their financial statements this includes current taxes which are taxes that are due in the current year and deferred taxes which are taxes that will be due in future years current taxes are relatively easy to understand they are simply the taxes that a company owes for the current year companies typically calculate their current taxes by multiplying their taxable income by the applicable tax rate deferred taxes are a bit more complicated they arise when a companyamp;#39;s book income differs from its taxable income this can happen for a variety of reasons such as when a company uses different depreciation methods for book and tax purposes or when a company takes a tax deduction that it will not be able to use until a future year when a company has deferred taxes it must
