What Is a Deferred Tax Asset

question 3

Multiple Choice

What is a deferred tax asset?

• A)A deductible temporary difference that results in future taxable income being less than accounting income.
• B)The amount of income tax recoverable in future periods as a result of deductible temporary differences.
• C)A deductible temporary difference that results in future taxable income being higher than accounting income.
• D)The amount of income tax payable in future periods as a result of taxable temporary differences.

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Definitions:

Dissolution

The closing down or ending of an entity or agreement, such as the dissolution of a company or marriage.

Partnership

A business structure where two or more individuals manage and operate a business in accordance with terms set out in a partnership agreement.

Dissociate

To formally end association or involvement with a business entity or partnership.

Partnership

A business operation legally established by two or more people sharing both profits and management duties.