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.

---

Definitions:

Departmental Contribution Margin

Departmental Contribution Margin refers to the contribution margin as calculated for specific departments within a company, showing the profit contribution of each department.

Separate Accounting Records

The practice of maintaining distinct records for different parts of a business's operations or for individual entities, ensuring clarity and precision in financial tracking.

Departments

Specific units or divisions within a business that have their own functions and responsibilities.

Departmental Income Statement

A financial statement that shows the revenue, expenses, and net income for each department within a company, helping to track the performance of distinct areas of the business.