- 2 Marks
Question
In accordance with IAS 12: Income Taxes, deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.
Required:
Explain temporary differences.
Answer
Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base. Temporary differences may be either:
- Taxable temporary differences: These are differences that will result in taxable amounts when the carrying amount of the asset or liability is recovered or settled in future periods.
- Deductible temporary differences: These are differences that will result in deductible amounts when the carrying amount of the asset or liability is recovered or settled in future periods.
(2 marks)
- Tags: Deferred Tax, IAS 12, Income Tax, Temporary Differences
- Level: Level 2
- Topic: Financial Reporting Standards and Their Applications
- Series: NOV 2018
- Uploader: Dotse