Why should I choose AnalystNotes?
AnalystNotes specializes in helping candidates pass. Period.
Basic Question 7 of 15
Which of the following is false?
B. The adjustment to the deferred tax asset or liability when rates change is computed using the old rate.
C. The adjustment to the deferred tax asset or liability when rates change is computed using the new rate.
D. The adjustment will be the amount to bring the balance in the deferred tax asset or liability to the amount that would be calculated if the new rate had been used all along.
A. When tax rates change, the deferred tax liability or asset is adjusted to the new amount that is now expected based upon the new rate.
B. The adjustment to the deferred tax asset or liability when rates change is computed using the old rate.
C. The adjustment to the deferred tax asset or liability when rates change is computed using the new rate.
D. The adjustment will be the amount to bring the balance in the deferred tax asset or liability to the amount that would be calculated if the new rate had been used all along.
User Contributed Comments 4
| User | Comment |
|---|---|
| stranger | correct answer here is B since D is true and has been given as explanation |
| kalps | Spot on old boy, I agree |
| johntan1979 | So I guess you could say that the tax rate change is retrospective. |
| ecapocas | Eh. It's kinda misleading. To do the full process you need to use both rates, then the difference between the two is your adjustment to the balances. |
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.