- CFA Exams
- CFA Level I Exam
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 27. Income Taxes
- Subject 3. Determining the Tax Base of Assets and Liabilities
CFA Practice Question
When enacted tax rates change, ______
A. an adjustment is made using estimated rates applied to the current deferred tax asset or liability balance.
B. an adjustment is made using the new rates applied to the income tax expense and taxes payable.
C. an adjustment is made to bring the deferred tax liability or asset to an amount based on the new rates.
Explanation: This adjustment is made in such a way that the deferred tax asset or liability will be the expected amount to reverse, based on the new rates.
User Contributed Comments 2
| User | Comment |
|---|---|
| kalps | Enacted tax rates change: Adjusment required to bring the deferred tax liabilty or asset to be the expected amount to be reversed based on the new tax rates |
| jpducros | kalps, you must be working in a Consolidation department ! ;-) |