标题: Disputable question/answer on Income Taxes (Reading 37) [打印本页] 作者: bcp901 时间: 2013-4-8 22:50 标题: Disputable question/answer on Income Taxes (Reading 37)
Guys,
Got a quick question for you:
The FRA textbook on page 418 has a problem (#3) as follows:
“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 liabilities.
C. deferred tax liabilities, less the net increase in deferred tax assets.
Now, I was feeling fairly sure the answer to this would be ‘C’ – But the textbook answer has choice ‘B’ listed instead.
The reasoning behind my choice comes from a simple formula written in Schweser study note as follows:
income tax expense = taxes payable + (net change in DTL) (net change in DTA)
So, wouldn’t choice ‘C’ be the correct one? Am I missing something?
Thanks in advance for any clarification!作者: onelife1 时间: 2013-4-8 22:51
please look at errata on the cfai website
In problem 1B (p. 418), change tax liability to tax asset.作者: hinsafdar 时间: 2013-4-8 22:51
cpk123, thanks for pointing out the errata I wasn’t aware of its existence.
Anyway, the errata doesn’t mention anything about Problem 3, so I’d think the textbook answer should be the correct one but I’m still at a loss as to why it is ‘B’ instead of ‘C’.作者: CFA4Techie 时间: 2013-4-8 22:52
look at the answer I think this has something to do with your formula having something to do with “change” while this is specifically saying “Increase”.
If the DTL increased you would pay lesser taxes. If the DTA increased you would pay more taxes.作者: Iginla2011 时间: 2013-4-8 22:52
I have another concern: Example 2 of Income Tax: Page 392 of CFAI text.
4. Account receivable on page 393 (last line)…gives the calculation as … [25% x (1500000+125000)]….BUT the problem stated “25 percent of the gross amount for doubtful debt”….(1,500,000+125,000) cant be the gross doubtful debt…isnt it? Please advice.
