Question

All of the following are procedures for the computation of deferred income taxes except to

a. identify the types and amounts of existing temporary differences.
b. measure the total deferred tax liability for taxable temporary differences.
c. measure the total deferred tax asset for deductible temporary differences and operating loss carrybacks.
d. All of these are procedures in computing deferred income taxes.

Answer 1

The correct answer is d. All of these are procedures in computing deferred income taxes.

Step-by-step explanation:

Deferred income taxes are the taxes that will be paid in the future on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Temporary differences can be either taxable or deductible, and they arise when there is a difference between the timing of when an item is recognized for accounting purposes and when it is recognized for tax purposes.

Therefore, to compute deferred income taxes, the following procedures need to be performed: identifying the types and amounts of existing temporary differences (option a), measuring the total deferred tax liability for taxable temporary differences (option b), and measuring the total deferred tax asset for deductible temporary differences and operating loss carrybacks (option c).