Question

Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if

a. it is probable that a future tax rate change will occur.
b. it appears likely that a future tax rate will be greater than the current tax rate.
c. the future tax rates have been enacted into law.
d. it appears likely that a future tax rate will be less than the current tax rate.

Answer 1

Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet under certain conditions.

Step-by-step explanation:

When calculating the deferred income tax amount on the balance sheet, tax rates other than the current tax rate may be used if certain conditions are met. These conditions include:

1. If it is probable that a future tax rate change will occur.
2. If it appears likely that a future tax rate will be greater than the current tax rate.
3. If the future tax rates have been enacted into law.

Using different tax rates allows for a more accurate representation of the future tax liability. By considering potential changes in tax rates, companies can better plan for their tax obligations.