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Basic Question 15 of 20
Which of the following statement(s) is (are) true with regard to deferred tax liability?
II. If the deferred tax liability is due to a temporary difference, it should be treated as debt.
I. If the deferred tax liability is not expected to reverse, it should be treated as equity.
II. If the deferred tax liability is due to a temporary difference, it should be treated as debt.
User Contributed Comments 3
| User | Comment |
|---|---|
| gth763s | Temporary difference does not guarantee it will finally reverse. |
| o123 | debt = liability ... so yes, you'd treat the DTL as its named; a liability. |
| krisscfa | I. If the deferred tax liability is not expected to reverse, it should be treated as equity. If the Equipment becomes obsolete...treated as neither Debt nor Equity.... |
I used your notes and passed ... highly recommended!
Lauren
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
CFA® 2024 Level I Curriculum, Volume 3, Module 9.