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Study Session 8: Financial Reporting and Analysis: Inventories, Long-Lived Assets, Income Taxes, and Non-Current Liabilities

Long Lived Assets

What is the difference between Impairment and Revaluation? How is impairment loss reversed? I am very confused between these two

Deferred Tax Liability

Dear Friends,

Here is an extract from 2008 Level 1 CFA Curriculum. In the section on ”Treatment of Operating Losses”:

1. How does the author say ”Operating losses are due to an excess of tax deductions over taxable revenues”?

Test Changes for 2019 (i.e. Op. Leases)

Hello - assuming this has already been asked (didn’t see it in my quick search though), but does anyone have a summary of the changes for the 2019 test?  Specifically am looking for changes for operating leases as these are now being added to the balance sheet.  Asking as I’m using a set of 2018 KS books that obviously do not reflect the change.  Just want to make sure I’m p

Tax base and carry amount

A company recognized rent received in advance amounting to $500,000 in the current year. For tax purposes the rental income is taxed at 10% when cash is received. The carrying value and tax base of this liability are closest to:

      Tax Base    Carrying Value
A.    $500,000    $0
B.    $0    $50,000
C.    $0    $500,000

Valuation Allowance Question


An Increase in the valuation allowance is most likely to indicate an increase in:

A. earnings.

B. shareholder’s equity.

C. net deferred tax liability.

Please explain you reasoning:

Reading 27, Inventories

How do I learn, remember, and retain the effects of increasing/decreasing prices and the effects of inflation on COGS and a firm?

Deferred Tax Effect on Net Income

Please someone help me with this exercise. My question is written in the end of it.
The following information is available for a company that prepares its financial statements according to US GAAP:


Deferred tax assets

Deferred tax liabilities

Valuation allowance

Deferred Tax Allowance

Hello all.

Can someone please help me with the logic of this question: 

There is a company with X amount of Deferred Tax Assets and Y amounts of Allowance for these assets in Years 2016 and 2017.
In 2017 Allowance was $115 lower than 2016.
If the valuation allowance had been the same in 2017 as it was in 2016, the company would have reported $115 higher: