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CMA Final · Corporate Financial Reporting · Income Taxes (Ind AS 12)

Ind AS 12 requires deferred tax to be measured using which rates?

Deferred tax is measured at tax rates enacted or substantively enacted by the end of the reporting period that are expected to apply when the asset is realised or the liability is settled, not at historical, average or approval-date rates.

  1. AThe tax rates enacted or substantively enacted by the end of the reporting period that are expected to apply when the asset is realised or the liability settledCorrect
  2. BThe tax rate applicable in the year the asset was originally acquired
  3. CThe average tax rate of the last three years
  4. DThe tax rate prevailing on the date the financial statements are approved

Explanation

Deferred tax assets and liabilities are measured at rates enacted or substantively enacted at the reporting date and expected to apply when the temporary difference reverses. Historical or average rates are not used, and the approval date is not the reference point.

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