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Basic Question 3 of 7
If an asset's tax base is less than its carrying value, a ______ should be created.
B. deferred tax liability
A. deferred tax asset
B. deferred tax liability
User Contributed Comments 2
| User | Comment |
|---|---|
| mrushdi | Tax base less means = More deductins under tax = so less taxable income = so less tax payable recognised upto date = so liability need to be created to account for the same. |
| khalifa92 | tax base < carrying value taxable income < tax expenses = deferred tax liability |
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Learning Outcome Statements
explain how deferred tax liabilities and assets are created and the factors that determine how a company's deferred tax liabilities and assets should be treated for the purposes of financial analysis;
calculate income tax expense, income taxes payable, deferred tax assets, and deferred tax liabilities, and calculate and interpret the adjustment to the financial statements related to a change in the income tax rate;
CFA® 2024 Level I Curriculum, Volume 3, Module 24.