There Is No Recognition of a Deferred Tax Item in Respect

question 24

Multiple Choice

There is no recognition of a deferred tax item in respect to goodwill because it is a residual amount and the recognition of a deferred tax item would:

• A) decrease the carrying amount of goodwill.
• B) increase the carrying amount of goodwill.
• C) decrease the profit on consolidation.
• D) increase the profit on consolidation.

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Definitions:

Revenues

Income generated from normal business operations and includes discounts and deductions for returned merchandise.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership stake of the owners.

Revenues

The total income generated from normal business operations and other activities over a specific time period.

Expenses

The costs incurred in the process of generating revenue, including operational, administrative, and sales costs.