Deferred Taxes Answer Wrong in Wiley and Ninja MCQ

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  • #197523 Reply
    agripper
    Participant

    Where is the $8000?

    At December 31, 20X1, Bren Co. had the following deferred income tax items:

    A deferred income tax liability of $15,000 related to a noncurrent asset
    A deferred income tax asset of $3,000 related to a noncurrent liability
    A deferred income tax asset of $8,000 related to a current liability

    Which of the following should Bren report in the noncurrent section of its December 31, 20X1, balance sheet?
    A.

    A noncurrent asset of $3,000 and a noncurrent liability of $15,000
    Correct B.

    A noncurrent liability of $12,000
    C.

    A noncurrent asset of $11,000 and a noncurrent liability of $15,000
    D.

    A noncurrent liability of $4,000
    You are correct, the answer is B.

    FASB ASC 740-10-45-4 provides that “an enterprise shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount.”

    Note that “amount” is singular, indicating that separate asset and liability amounts should be “netted,” leaving a single amount.

    Amount to be reported in Bren's noncurrent section of balance sheet at December 31, 20X1:

    Deferred tax liability $15,000
    Less deferred tax asset (3,000)


    Net noncurrent liability to
    be reported on balance sheet $12,000
    ========

     
    “wiley-cpaexcel-cpa-review”/
     

    #1262442 Reply
    Anonymous
    Inactive

    😖

    #2344455 Reply
    smurf
    Participant

    Not sure were you got that answer but its (now) wrong. Now the correct answer should be A non-current liability of $4,000. Under GAAP, deferred tax liabilities and assets should be recorded as a noncurrent number on the b/s. all deferred tax liabilites and assets must be netted and shown as a signle amount. 15-3-8=4 noncurrent liab.

    #2345559 Reply
    Lidis
    Participant

    Hello Agripper
    You can not mix current with noncurrent. You can offset noncurrent deferred assets with noncurrent deferred tax liability.
    But current with noncurrent is not allowed.
    Lidis

    #2346597 Reply
    Tncincy
    Participant

    2015 question?

    It begins with a 75
    Been here too long as a cheerleader.....time to pass
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