Which of the Following Statements Is Correct with Respect to AASB

question 67

Multiple Choice

Which of the following statements is correct with respect to AASB 112 Income Taxes when a non-current asset is revalued?

• A) On revaluation date, the revaluation reserve is increased by the product of the temporary difference and the tax rate.
• B) On revaluation date, the revaluation reserve is decreased by the product of the temporary difference and the tax rate.
• C) On revaluation date, a deferred tax liability is created equal to the amount of the temporary difference.
• D) On revaluation date, a deferred tax asset is created equal to the amount of the temporary difference.

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Definitions:

Unrealized Profit

Unrealized profit refers to a profit that has been earned but not yet received or recorded through a transaction, often observed with investments that have increased in value but haven't been sold.

Consolidated Financial Statements

are financial statements that aggregate the financial position and results of an entity and its subsidiaries, presenting them as a single economic unit.

Ending Inventory

The total value of all inventory that a company has on hand at the end of its fiscal year, including goods ready for sale and those still in the production process.

Amortization

Amortization refers to the process of gradually reducing the value of an intangible asset or a loan over a specified period of time.