CAF-6 · Chapter 7 · Question 10 of 15
An 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. What is the tax base of the receivable?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 0
Explanation
Since the full amount will be taxed in the future and none of it has been taxed yet, the tax base is nil. (TB = CA - untaxed future benefits = 10,000 - 10,000 = 0).
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