CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

When the enacted tax rates change, it is a change in ______.

A. estimate that does not affect the current period's income
B. accounting principle that affects the current period's income
C. estimate that affects the current period's income
Correct Answer: C

When tax rates change, there is an adjustment to the deferred tax asset or liability to the amount it would be under the new rates. This adjustment is included in the current period's income.

User Contributed Comments 4

User Comment
kalps When enacted tax rate changes there is a change in the deferred tas asset or liability and so it does affect current yea income
teddajr When enacted tax rate changes, it is a change in estimate and not in accounting principle... Why?
thekapila Well its just a change in estimate becouse the accounting principle is not change. for example u still use same depriciation method or u still use matching principle to match revenue n expense its just the rates r changed so do the calculations.
sapu It should be current year's income or current year's taxable income?
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