btcapital

I suck at accounting but since no one else replied I can try to help you out.

1. When a company prepares the balance sheet, in most cases the income tax expense is not paid out. So the company makes a provision for this. That is income tax provision. In simple terms

Income tax expense=Income tax provision

2. By accrued income taxes payable it is referring to the Income Taxes accrued during the current year. Not last years tax.

3. Statutory rate is the tax rate the government would normally want to impose on a company. Let me make an example.

EBIT=$100 (includes profit of $40 from a particular product X)
Statutory Tax=50%

Now the government decides to exempt all profits from product X from taxes. So you would pay only ($100-$40)=$60*0.5=$30 in taxes. This exemption is permanent and you would never have to pay it back. So, not DTA/DTL is created.

Effective Tax=Tax Expense/EBT=$30/$100=%30

A permanent difference is causing a difference in the statutory tax rate and the effective tax rate. Note that, if this was not a permanent difference then a DTL would have been created and the Effective Tax Rate would have equalled the statutory tax rate.