CMA Intermediate · Corporate Accounting and Auditing · Presentation of Financial Statements (Ind AS 1)

Under Ind AS 1, when an entity presents current and non-current assets and liabilities as separate classifications in its balance sheet, how must it treat deferred tax assets and deferred tax liabilities?

Deferred tax assets and liabilities must never be shown as current. Where a balance sheet separates current and non-current items, Ind AS 1 says an entity shall not classify deferred tax assets or liabilities as current, whatever the expected timing of reversal.

1. AClassify them as current if reversal is expected within twelve months
2. BClassify them as current assets or current liabilities only when they arise from timing differences on inventories
3. CClassify them as current when the entity's operating cycle is shorter than twelve months
4. DIt shall not classify them as current assets or current liabilitiesCorrect