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. the future tax rates have been enacted into law.
B. it appears likely that a future tax rate will be less than the current tax rate.
C. it is probable that a future tax rate change will occur.
D. it appears likely that a future tax rate will be greater 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 if the future tax rates have been enacted into law. The correct answer is A.

Step-by-step explanation:

The correct answer is A. the future tax rates have been enacted into law.

When calculating the deferred income tax amount on the balance sheet, tax rates other than the current tax rate may be used if there is certainty that future tax rates have been enacted into law. This means that the future tax rates have been officially implemented and will be effective in the future.

Using enacted future tax rates ensures accuracy in calculating the deferred income tax amount and reflects the actual tax liabilities that will be incurred in future periods.