IFRS for SMEs) IFRS for SMEs Income Taxes and Deferred Tax 2

Question 1

Under IFRS for SMEs, where is the income tax expense related to items recognized in other comprehensive income (OCI) presented?

Accepted Answer

In other comprehensive income, not in profit or loss

Answer

Always in profit or loss

Answer

As a direct deduction from equity

Answer

In the notes only, not in the primary statements

Question 2

Under IFRS for SMEs, a taxable temporary difference arises when:

Accepted Answer

An asset's carrying amount exceeds its tax base

Answer

An event results in a higher tax base than carrying amount for a liability

Answer

Tax losses are available for carry-forward

Answer

An entity uses the cash basis for tax purposes

Question 3

Under IFRS for SMEs, deferred tax assets and liabilities should be presented in the balance sheet as:

Accepted Answer

Non-current assets and liabilities

Answer

Current assets and liabilities

Answer

Separated between current and non-current based on expected reversal

Answer

Netted against current income tax payable

Question 4

An SME has unused tax losses. Under IFRS for SMEs, a deferred tax asset for those losses is recognized when:

Accepted Answer

It is probable that future taxable profits will be available against which the losses can be utilized

Answer

The entity has a history of profitable operations

Answer

Management has a formal tax planning strategy

Answer

The losses are confirmed by tax authorities

Question 5

Under IFRS for SMEs, deferred tax assets and liabilities may be offset when:

Accepted Answer

The entity has a legally enforceable right to set off current tax assets and liabilities and they relate to taxes levied by the same authority

Answer

Management decides to present them net

Answer

Both balances are immaterial individually

Answer

The entity operates in a single tax jurisdiction

Question 6

Under IFRS for SMEs, which event would trigger a reassessment of an unrecognized deferred tax asset?

Accepted Answer

An improvement in future trading conditions making it probable that future taxable profits will be available

Answer

Receipt of a dividend from a subsidiary

Answer

A change in the entity's auditor

Answer

Payment of current year income tax