ABC Limited Has an Asset with a Carrying Value of €50

question 5

Multiple Choice

ABC Limited has an asset with a carrying value of €50 000. The tax base of this asset is €40 000. The tax rate is 30%. As a result, which of the following deferred tax items does Roland Limited have?

• A) A deferred tax asset of €10 000;
• B) A deferred tax liability of €3000;
• C) A deferred tax liability of €10 000;
• D) A deferred tax asset of €3000.

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Definitions:

Certificate Of Investment

A financial document representing a deposit with a specified interest rate and maturity date, often issued by banks.

Bond

A contract between a borrower and a lender, in which the borrower agrees to pay the loan at some time in the future. Some bonds also make regular, constant payments once or twice a year.

Annual Interest Rate

The percentage increase in money owed per year, including the effect of compounding.

Annual Interest Rate

The percentage of a sum of money charged for its use over a year.