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178. Deferred tax assets and liabilities arise from taxable and deductibe temporary differences.Which of the following is NOT a circulstance giving rise toa a temporary difference?
a. Depreciation accelerated for the tax purposes
b. Development costs amortised in profit or loss but tax was deductible in full when incurred
c. Accrued ecpenses which have already been deducted for tax purposes
d. Revenue included in accounting profit when invoiced but only liable for tax when the cash is received.ANS-C
Good day,Pls i don’t understand why the answer is C. I’ll appreciate if you can explain better.Hi,
the key to deferred tax is there being a temporary difference between the carrying value under IFRS and what the tax base is (i.e. what the treatment is by the tax authorities).
If accrued expenses have been deducted for tax purposes then the IFRS treatment (recognising an expense in the period it relates to) is the same as the tax treatment (deducting it as an allowable expense) and hence there is no temporary difference and no deferred tax.
The other three options give rise to temporary differences.
Thanks
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