Which of the Following Statements Is Correct with Respect to AASB

question 45

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.
• E) None of the given answers

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Definitions:

Present Value Interest Factors

A factor that can be used to calculate the present value of a sum that is to be received in the future.

Guaranteed Residual Value

The predetermined value guaranteed to the lessee by the lessor or a third party, ensuring the asset will have a certain value at the end of the lease term.

Maintenance Agreement

A contract in which one party agrees to maintain an asset owned by another party, typically involving regular service checks and repairs.

Guaranteed Purchase Options

Provisions in insurance or financial contracts allowing the holder to acquire additional coverage or securities at predetermined conditions.