Question

Deferred taxes should be presented on the statement of financial position

a. as one net debit or credit amount.
b. as a net amount in the non-current section.
c. in two amounts: one for the net debit amount and one for the net credit amount.
d. as reductions of the related asset or liability accounts.

Answer 1

The correct answer is option c. in two amounts: one for the net debit amount and one for the net credit amount.

Step-by-step explanation:

Deferred taxes on the statement of financial position are generally presented as a net amount, either as a net debit or a net credit, depending on whether the company expects to pay more taxes in the future or to receive a tax benefit. The specific presentation though can vary based on accounting policies and the requirements of financial reporting standards. It is essential to follow the guidelines set by standards such as the International Financial Reporting Standards (IFRS) or the Generally Accepted Accounting Principles (GAAP) in the United States.

According to GAAP, deferred tax liabilities and assets should be recognized as part of a company's balance sheet and should not be offset unless they relate to taxes levied by the same governmental authority and the company has a legal right to offset.