There is no recognition of a deferred tax item in respect to goodwill because it is a residual amount and the recognition of a deferred tax item would:
A.decrease the carrying amount of goodwill; B.increase the carrying amount of goodwill; C.decrease the net profit on consolidation;; D.increase the net profit on consolidation.
Answer: B. Why?
First we have to understand 'Taxable Temporary Difference'. Temporary differences are differences between the carrying value... View the full answer
- I understand Taxable Temporary Difference, and that the difference between the CA of goodwill and its TB will lead to a taxable temporary difference and eventually DTL. However, how does DTL increase the CA of goodwill?
- Nov 02, 2018 at 3:07am