What could be possibly recognised as of the tax losses? Reading required: Learning objective 13.4.1 on page 417Group of answer choicesDeferred tax assetDeferred tax liabilityCurrent tax assetCurrent tax liability PreviousNext
Question
What could be possibly recognised as of the tax losses? Reading required: Learning objective 13.4.1 on page 417Group of answer choicesDeferred tax assetDeferred tax liabilityCurrent tax assetCurrent tax liability PreviousNext
Solution
Tax losses can potentially be recognised as a Deferred Tax Asset.
Here's why:
-
A tax loss occurs when the taxable income is less than zero. This means the company has incurred more expenses than it has earned income, leading to a negative taxable income.
-
This loss can be carried forward to future years to offset against future taxable profits. This is beneficial for the company as it reduces the future tax liability.
-
This future economic benefit is recognised as a Deferred Tax Asset in the balance sheet of the company.
-
A Deferred Tax Asset is recognised for deductible temporary differences and unused tax losses.
-
Therefore, tax losses could possibly be recognised as a Deferred Tax Asset.
Please note that the recognition of Deferred Tax Assets is subject to the company's estimation of future profitability, as the benefit will only be realised if the company generates sufficient taxable profits in the future.
Similar Questions
In the previous year, SAM Ltd had made a tax loss of $60,000 for which it had recognized a deferred tax asset. The taxable profit for the current year before recoupment of tax loss is $250,000. SAM Ltd had claimed exempt income of $40,000 in calculating its current taxable profit. Ignore all other temporary differences. Tax rate is 30%. What is the current tax liability of SAM Ltd after recoupment of the tax loss?Group of answer choices$69,000$39,000$75,000$12,000
Which of the following items is NOT required to be disclosed in accordance with AASB 112 Income Taxes?Group of answer choicesan explanation of the relationship between tax expense and each component of other comprehensive income.the amount of any benefit arising from a previously unrecognised tax loss.for each type of temporary difference and in respect of each type of unused tax loss the amount of deferred tax asset or deferred tax liability that has been recognised in the statement of financial position.income tax relating to each component of other comprehensive income.
Losses are allowed as deductions from gross income if the following provisions are met, except:Select one:a.The loss must be that of a taxpayer and incurred in connection with trade, business or professionb.The loss need not be reported to the BIR.c.The loss must not be compensated by insurance or other forms of indemnityd.The loss must be actually sustained in a closed and completed transaction
Which of the followings is not the defined tax base of the asset? Reading required: Learning objective 13.5.2 on pages 420-421Group of answer choicesCarrying amountRecoverable amountFuture deductible amountGross amount PreviousNext
Net income or loss is: Multiple choice question.all revenue minus all expenses and taxesis net sales minus cost of goods soldis operating expenses minus taxesis gross profit plus operating expenses and taxes
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.