Question

Under IFRS companies are required to provide a reconciliation between actual tax expense and the applicable tax rate. The purpose(s) of this reconciliation include I. Making better prediction of future cash flow.

II. Predicating future cash flows for operating loss carryforwards.
III. Assessing the composition of the net deferred income tax liability. IV. Assessing quality of earnings.
a. I, III, and IV only.
b. I, II and IV only.
c. I and IV only.
d. I, II, III and IV.

Answer 1

The purpose(s) of reconciling actual tax expense and the applicable tax rate under IFRS include making better predictions of future cash flow, assessing the composition of the net deferred income tax liability, and assessing the quality of earnings.

Step-by-step explanation:

The purpose(s) of reconciling actual tax expense and the applicable tax rate under IFRS include:

1. Making better prediction of future cash flow
2. Assessing the composition of the net deferred income tax liability
3. Assessing quality of earnings

Therefore, the correct answer is option a. I, III, and IV only.