Which of the Following Statements Concerning the Classification of Deferred

question 61

Multiple Choice

Which of the following statements concerning the classification of deferred tax assets and liabilities is true?

• A) A deferred tax asset is classified as noncurrent if the company expects the future tax benefit to be received more than 12 months from the balance sheet date.
• B) All deferred tax assets and liabilities are treated as noncurrent beginning in 2016.
• C) A deferred tax asset related to a bad debt reserve is classified as current if the related accounts receivable is classified as a current asset.
• D) A deferred tax asset related to inventory capitalization is classified as noncurrent if the company uses a FIFO accounting method and the inventory to which the deferred tax asset relates will not be treated as sold within 12 months from the balance sheet date.

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Definitions:

Lawful

Conforming to, permitted by, or recognized by law and regulations.

Sherman Act

A landmark federal statute in the United States antitrust law passed by Congress in 1890 that prohibits monopolistic practices and promotes competition.

Market Power

Refers to the ability of a company or entity to influence the price and output levels in a market.

Competitors Cooperate

A situation where businesses that usually compete against each other decide to work together towards a common goal or project.