A temporary difference arises when a revenue item is reported for tax purposes in a period
After it is reported Before it is reported
in financial income in financial income
a. Yes Yes
b. Yes No
c. No Yes
d. No No
3. A deferred tax liability is classified on the balance sheet as either a current or a noncurrent liability. The current amount of a deferred tax liability should generally be
a The net deferred tax consequences of temporary differences that will result in net taxable amounts during the next year
b Totally eliminated from the financial statements if the amount is related to a noncurrent asset.
c Based on the classification of the related asset or liability for financial reporting purposes.
d The total of all deferred tax consequences that are not expected to reverse in the operating period or one year, whichever is greater
The solution explains two multiple choice questions relating to temporary timing difference and deferred tax liability