After Applying the Balance Sheet Method to Determine the GAAP

question 11

Essay

After applying the balance sheet method to determine the GAAP income tax expense of Cutter Inc., the following account balances are found. Determine the balance sheet presentation of these amounts. Hint: Which of the accounts should you combine for the final balance sheet disclosure? $$\begin{array} { l c } \text { Deferred tax assets, current } & \$ 100,000 \\\text { Deferred tax liabilities, current } & 415,000 \\\text { Deferred tax assets, noncurrent } & 120,000 \\\text { Deferred tax liabilities, noncurrent } & 30,000\end{array}$$

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Definitions:

Fair Value

What would be pocketed from an asset sale or the price to offload a liability during a methodical engagement with market individuals on the day of measurement.

Present Obligation

A duty or responsibility to act or perform in a certain way.

Goodwill

The intangible asset that arises when a buyer acquires an existing business but pays more than the fair market value of the net assets.

AASB 3

is the Australian Accounting Standards Board's standard on Business Combinations, detailing the accounting treatment for merging businesses, including the recognition and measurement of assets, liabilities, and any non-controlling interest.