2 Questions regarding Income Tax (FSA, SS9)
There are two questions and answers (one from CFA text and the other from Schweser) where I don’t understand. Appreciate if you can explain.
From CFA Text, FSA page 418, question #3
Q. Income tax expense reported on a company’s income statement equals taxes payable, plus the net increase in
a)deferred tax assets and deferred tax liabilities
b)deferred tax assets, less the net increase in deferred tax liablities
c)deffered tax liabilities, less the net increase in deferred tax assets.
I chose “c”, but according to CFA text the answer is “b”. The solution in CFA text states “B is correct. Higher reported tax expense relative to taxes paid will increase the deferred tax asset, whereas lower reported tax expense relative to taxes paid increases the deferred liability”. ____________________________________________________________________
From Schweser, page 217, question 12
Q. An analyst is comparing a firm to its competitors. THe firm had a deferred tax liability that results from accelerated depreiation for tax purposes. The firm is expected to continue to grow in the foreseeable futher. How should the liability be treated for analysis purposes?
a)It should be treated as equity at its full value
b)It should be treated as a liability at its full value
c)The present value should be treated as a liability with the remainder being treated as equity
The answer is “a” with the explanation given from Schweser, “The DTL is not expected to reverse in the foreseeable future. The liability should be treated as equity at its full value.” I don’t understand how the question warrants DTL not expected to reverse in the foerseeable future. I would assume if the firm is continueing to grow, it should be able to payoff its DTL, hence reverse |
发表于 2013-4-12 21:58
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