Discuss accounting and Tax treatment of R&D under GAAP & ITAA? Please provide it in the form of table (like in given image) as well as explanation.

It should be in Australian perspective.

19.5% TABLE 12.1 Examples of differences of treatment of revenues and expenses under GAAP and ITAA Accounting treatment Taxation treatment Deferred development costs Sometimes recognised as an asset Tax deduction on cash payment and amortised Goodwill impairment Expense Not deductible Entertainment outlays Expense Not deductible Fines and penalties Expense Not deductible Interest revenue Recognised when receivable Taxable on cash receipt Interest expense Recognised as an expense when Tax deduction on cash payment payable Depreciation Expense Tax deduction but taxation depreciation rate may differ from accounting depreciation rate Receivables (e.g. rent, interest) Recognised as an asset and Income taxable on cash receipt revenue on accrual Bad and doubtful debts Expense when debt is doubtful Tax deduction when debt is written off as bad Revenue received in advance Recognised as a liability, with Income taxable on receipt of cash revenue recognised when earned rued expenses (e.g. provisions Recognised as an expense on Tax deduction on cash payment for long service leave, warranties) accrual Prepaid expenses (e.g. interest, rent) Recognised as an asset, then Tax deduction on cash payment expensed in a later period as benefits received It should be noted, looking at table 12.1, that the different treatment of some revenues and expenses for taxation and accounting give rise to two categories of differences between taxable and accounting profit. 1. Permanent differences that will never reverse Some revenues may never be taxed (e.g, government grant). Some expenses may never be allowed as a deduction (e.g. entertainment expenses, fines. goodwill impairment) 2. Temporary differences that will reverse over time Some revenues may not be recognised for taxation in the current period when earned, but in the ne! period when received (e.g. rent or interest receivable). That will make the taxable profit lower than the accounting profit in the current period, but in the next period accounting profit will be lower. Antiinh nihil CE 1009