CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

When the liability method is used, the amount recognized for income tax expense is ______.
A. the sum of the taxes currently payable, the amount of the adjustment to the deferred tax asset, and the amount of the adjustment to the deferred tax liability
B. the sum of the taxes currently payable and the amount of the adjustment to the deferred tax asset, less the amount of the adjustment to the deferred tax liability
C. the sum of the taxes currently payable and the amount of the adjustment to the deferred tax liability, less the amount of the adjustment to the deferred tax asset
Explanation: The debit to income tax expense is the amount necessary to make the journal entry balance. It will be calculated as income tax payable plus the credit to the deferred tax liability, less the debit to the deferred tax asset.

User Contributed Comments 3

User Comment
kalps As before: Under liability method: Income tax liability = income tax payable + Credit to deferred tax liabilty less deferred tax asset
danlan Should be
income tax expense =
income tax payable+credit to deferred tax liability - credit to deferred tax asset.
dbedford Here's my nmemonic for this:

"Girls with T & A are NIce Luvin"

TI + DTA = NI + DTL

Therefore

TI = NI + DTL - DTA
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