Question

Deferred income taxes are based on the:_______.

a. current tax rate or future tax rates, depending on when the temporary difference will reverse.
b. future tax rates if they have been enacted into law.
c. current tax rate in all cases.
d. future tax rates in all cases.

Answer 1

a. current tax rate or future tax rates, depending on when the temporary difference will reverse.

Step-by-step explanation:

Deferred Tax is not payable to tax Authority it is only a book entry used by Accountants to match Income taxes payable in terms of Income Act and Income taxes expected to be presented to users in financial Statements.

Deferred taxes are based on current tax rate or future tax rates, depending on when the temporary difference will reverse.