Which of the Following Statements Best Describes the ASC 740

question 119

Multiple Choice

Which of the following statements best describes the ASC 740 rules related to the disclosure of the components of deferred tax assets and liabilities in the company's income tax note?

• A)A publicly traded company should disclose the approximate "tax effect" (dollar amounts)of all of the components of its deferred tax assets and liabilities in a footnote to the financial statements.
• B)A publicly traded company should disclose the approximate "tax effect" (dollar amounts)of only those components of its deferred tax assets and liabilities that give rise to a "significant" portion of net deferred tax liabilities and deferred tax assets in a footnote to the financial statements.
• C)A privately held company should disclose the approximate "tax effect" (dollar amounts)of all of the components of its deferred tax assets and liabilities in a footnote to the financial statements.
• D)A privately held company should disclose the approximate "tax effect" (dollar amounts)of only those components of its deferred tax assets and liabilities that give rise to a "significant" portion of net deferred tax liabilities and deferred tax assets in a footnote to the financial statements.

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Definitions:

Loan Liability

A financial obligation representing money borrowed that must be repaid, with interest, to the lender.

Exchange Rates

The speed at which one country's currency can be traded for another's, impacting global trade and investment activities.

Calendar Year End

Indicates the end of the fiscal year for a business or organization that aligns with the end of the calendar year, December 31.

American Bank

A financial institution in the United States that offers various banking services such as deposits, loans, and other financial services.