REF: Page 548 - Official Curriculum - Income Taxe -VOLUME 3
Good Morning,
Please, I would like to know if anyone could tell me if solution to example 5 is incorrect.
I would answer The deferred tax liability that should be reflected on the balance sheet is thus not €56,000 but only €60,000 (€176,000 − €120,000+ €6,000 - €2,000). That is why revaluation has been depreciated one year (+ €6,000) and the adjustment of €2,000 would be to eliminate the effect of revaluation on the previous cost.
In conclusion, I understand DTL only must reflect the effect of differences between Tax Basis asset value (€700,000) and Carrying amount (€850,000) , without taking into account revaluation.
Am I wrong?
Thanks a lot in advance!!!
(Institute 549)
Institute, CFA. 2016 CFA Level I Volume 3 Financial Reporting and Analysis. CFA Institute, 07/2015. VitalBook file.
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