CAF-6 · Chapter 7 · Question 11 of 15
Wait Ltd recognizes a provision for product warranty of Rs. 50,000. The cost is only deductible for tax purposes when the warranty claims are actually paid. What kind of temporary difference is this?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Deductible Temporary Difference
Explanation
For a liability, CA (50,000) > TB (0). This results in a deductible temporary difference, which leads to a deferred tax asset.
More IAS 12 Income Taxes MCQs
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