1. An entity shall offset a deferred tax asset and deferred tax liabilityA. When income taxes are levied by the same taxing authorityB. Expected future tax law regardless of whether enacted or notC. Under all circumstancesD. Choices A and B are correct 10. Which statement(s) is/are correct regarding reporting deferred income taxes in the financial statements?I.Deferred tax asset is always classified as non-current asset.Deferred tax liability is always classified as non-current liability.Deferred tax asset is classified as current when it is expected to reverse within 12 months from the end of the currentreporting date.Deferred tax liability is classified as current when it is expected to reverse within 12 months from the end of the currentreporting date.II.III.IV.A. I and II onlyB. III and IV onlyC. I and IV onlyD. II and III only

As per IAS 12 - Income Taxes, An entity shall offset a deferred tax asset and deferred tax liability…

An entity shall offset a deferred tax asset and deferred tax liability A. When income taxes are levied by the same taxing authority B. Expected future tax law regardless of whether enacted or not C. Under all circumstances D. Choices A and B are correct

An entity shall offset a deferred tax asset and deferred tax liability A. When income taxes are levied by the same taxing authority B. Expected future tax law regardless of whether enacted or not C. Under all circumstances D. Choices A and B are correct

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. An entity shall offset a deferred tax asset and deferred tax liability

A. When income taxes are levied by the same taxing authority
B. Expected future tax law regardless of whether enacted or not
C. Under all circumstances
D. Choices A and B are correct

10. Which statement(s) is/are correct regarding reporting deferred income taxes in the financial statements?
I.
Deferred tax asset is always classified as non-current asset.
Deferred tax liability is always classified as non-current liability.
Deferred tax asset is classified as current when it is expected to reverse within 12 months from the end of the current
reporting date.
Deferred tax liability is classified as current when it is expected to reverse within 12 months from the end of the current
reporting date.
II.
III.
IV.
A. I and II only
B. III and IV only
C. I and IV only
D. II and III only

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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