CAF-6 · Chapter 7 · Question 4 of 15
A deferred tax asset should be recognized for unused tax losses and unused tax credits to the extent that:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It is probable that future taxable profit will be available against which they can be utilized.
Explanation
Deferred tax assets for losses/credits are only recognized when it is probable that future taxable profits will exist to utilize those benefits.
More IAS 12 Income Taxes MCQs
- Q6Which of the following is an example of an 'Exempt' temporary difference where no deferred tax is recognized at initial recognition?
- Q7An entity revalues its building upwards by Rs. 1 million. The tax laws do not allow this revaluation for tax purposes. Where should the…
- Q8Which of the following is true regarding the discounting of deferred tax assets and liabilities?
- Q9How should deferred tax assets and liabilities be classified in the Statement of Financial Position?
- Q10An entity has a trade receivable with a carrying amount of Rs. 10,000. For tax purposes, the revenue is only taxed when cash is collected…