The Criterion for Recognising a Deferred Tax Asset Is That

question 52

Multiple Choice

The criterion for recognising a deferred tax asset is that:

• A) it should be fully recognised if it is probable that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised.
• B) it should be recognised if it is possible that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised.
• C) it should be recognised to the extent, and only to the extent, that it is possible that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised.
• D) it should be recognised to the extent, and only to the extent, that it is probable that future taxable amounts within the entity will be available against which the deductible temporary differences can be utilised.

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Definitions:

Excess Amortizations

Amortization amounts exceeding what is needed for the gradual write-off of an asset over its useful life, often indicating accelerated expense recognition.

Accrual-based Net Income

The net income calculated under the accrual basis of accounting, where revenues and expenses are recorded when earned or incurred, not necessarily when cash is received or paid.

Domestic Corporations

Corporations that are incorporated and operate within the same country.

Noncontrolling Interest

A shareholder's equity in a corporation that doesn't give the shareholder a controlling interest, representing a share of equity and earnings not owned by the parent company.