ACCA FR · Chapter 9 · Question 2 of 8
Under IAS 12, deferred tax is calculated on temporary differences. What is a temporary difference?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The difference between the carrying amount of an asset or liability and its tax base
Explanation
IAS 12 uses a balance sheet approach. A temporary difference is the difference between the carrying amount of an asset or liability in the SFP and its tax base. Items that are never taxable or deductible are permanent differences and do not give rise to deferred tax.
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