FR B Taxation, government grants and foreign currency

An asset has a carrying amount of $80,000 and a tax base of $50,000. The tax rate is 25 percent. What is the deferred tax liability?

• 1 $32,500
• 2 $12,500
• 3 $20,000
• 4 $7,500

Which situation usually gives rise to a deferred tax liability?

• 1 Accounting depreciation is faster than tax allowances
• 2 Tax allowances are faster than accounting depreciation
• 3 The tax rate falls
• 4 Revenue is exempt from tax

A revaluation surplus is recognised in other comprehensive income. Where is the related deferred tax recognised?

• 1 It is not recognised
• 2 In profit or loss
• 3 In other comprehensive income
• 4 In revenue

Prior year tax was estimated at $20,000 and the final amount was $22,000. What happens in the current year?

• 1 The $2,000 under-provision is added to the current year charge
• 2 It is ignored
• 3 The prior year is restated
• 4 It is deducted from the current year charge

When are grants related to income recognised in profit or loss?

• 1 At the end of the project
• 2 Never
• 3 Over the periods in which the related costs are recognised
• 4 When received

Goods are bought on credit for FC 120,000 when $1 = FC 4.0. At the year end $1 = FC 3.0. What is the exchange difference?

• 1 A loss of $10,000
• 2 A loss of $30,000
• 3 No difference
• 4 A gain of $10,000

At the reporting date, which items are retranslated at the closing rate?

• 1 Non-monetary items at historical cost
• 2 Monetary items
• 3 Inventories at cost
• 4 Equity share capital

What is the functional currency?

• 1 The currency used in the statements
• 2 The currency of its largest supplier
• 3 The currency of the parent's country
• 4 The currency of the main economic environment in which the entity operates