A financial analyst would classify deferred tax li
A financial analyst would classify deferred tax liabilities as equity (versus a liability) when:
A.the deferred tax liabilities are expected to decline over time.
B.the deferred tax liabilities are predominantly comprised of permanent differences.
C.a change in tax law may result in the deferred taxes never being paid by the company.
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2024-10-16 07:18:00
Ans:C.
If a change in tax law or a change in operations results in deferred taxes never being paid by the company, the deferred tax liabilities would be treated as equity by the financial analyst.
A is incorrect.A financial analyst would treat deferred tax liabilities that are expected to decline over time as a legitimate liability.
B is incorrect.Permanent differences are not included in deferred taxes.
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