Tetra Corp, an IFRS reporter, has the deferred tax assets and liabilities presented below:ItemClassification on the Balance Sheet of Related AccountDeferred Tax Associated with ItemExcess of warranty expense over warranty deductionsCurrent$69,000 AssetAccelerated depreciation for tax purposesNoncurrent$79,000 LiabilityInstallment sales receivableCurrent$39,000 LiabilityContingent liabilityCurrent$29,000 AssetWhat will the company report for deferred taxes on the balance sheet?Group of answer choicesnoncurrent assets: deferred tax asset $20,000noncurrent liabilities: deferred tax liability $20,000current assets: deferred tax asset $59,000; noncurrent liabilities: deferred tax liability $79,000Companies do not report deferred taxes on the balance sheet under IFRS.

The objective of the question is to determine how Tetra Corp, an IFRS reporter, will report deferred…

Answered: Tetra Corp, an IFRS reporter, has the…

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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Tetra Corp, an IFRS reporter, has the deferred tax assets and liabilities presented below:

Item	Classification on the Balance Sheet of Related Account	Deferred Tax Associated with Item
Excess of warranty expense over warranty deductions	Current	$69,000 Asset
Accelerated depreciation for tax purposes	Noncurrent	$79,000 Liability
Installment sales receivable	Current	$39,000 Liability
Contingent liability	Current	$29,000 Asset

What will the company report for deferred taxes on the balance sheet?

Group of answer choices

noncurrent assets: deferred tax asset $20,000

noncurrent liabilities: deferred tax liability $20,000

current assets: deferred tax asset $59,000; noncurrent liabilities: deferred tax liability $79,000

Companies do not report deferred taxes on the balance sheet under IFRS.

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

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