Question

Multiple categories of deferred taxes should be classified into a net current amount and a net noncurrent amount.

A) True
B) False

Answer 1

The statement that deferred taxes should be classified into a net current amount and a net noncurrent amount is True. Companies disaggregate their deferred tax assets and liabilities into parts that are expected to be resolved within or after one year or the operating cycle.

Step-by-step explanation:

The student's question is related to the classification of deferred taxes into current and noncurrent amounts on a balance sheet. The assertion that multiple categories of deferred taxes should be classified into a net current amount and a net noncurrent amount is True. Deferred taxes are indeed split into current and noncurrent parts based on the timing of when the taxes are expected to be settled with the tax authorities. Current deferred taxes are those that are anticipated to be settled within the normal operating cycle of the business or one year, whichever is longer. Noncurrent deferred taxes are those that are expected to be settled in periods beyond the operating cycle or one year.