CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Bay Tree Golf Corp. recorded a deferred income tax liability in 2015. The amount resulted from Bay Tree's book income exceeding its taxable income. The liability is expected to reverse in 2020, when taxes will become currently payable. At the end of 2015, which one of the following describes the valuation of deferred income taxes payable?

A. Historic cost
B. Amortized cost
C. Current market value
Correct Answer: A

Although the deferred income tax liability is long-term, GAAP requires it to be valued at historic cost.

User Contributed Comments 1

User Comment
achu Historic cost is essentially nominal (undiscounted) cost
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