Hi,
Saw this in another thread, and I think the answer A is wrong, because taxable temporary difference is DTL. So the answer should be B. Can anyone confirm?
Taxable temporary differences would most likely arise when:
a) the carrying amount of a Liabilty exceeds its tax base
b) the carrying amount of an asset exceeds its tax base
c) the carrying amount of an asset s less than its tax base
Answer: A
A creates a DTL DTA.
B creates a DTA DTL.
C creates a DTL DTA.
Confused. Can you explain why?
According to the notes, tax based (tax reporting) of a liability < carrying value (financial reporting) = pay more tax now on income statement, you will pay less later. So, answer A creates DTA.
B creates DTL
C creates DTA
My mistake. (Note to self: don’t post replies when your brain is tired.)
You’re right, and I’ve corrected what I wrote above.
Good catch.