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:

Legal Tender

Currency that is legally recognized by a government as a valid form of payment.

Currency Prices

The value of one currency expressed in terms of another, often influenced by factors such as inflation, interest rates, and economic stability.

Supply and Demand

Fundamental economic concepts describing the relationship between the availability of a product or service (supply) and the desire of buyers for it (demand), which determines the market price.

Fiat Currency

A currency that the government has declared to be legal tender but is not backed by any physical commodity.