Financial Statement Presentation: Taxes Receivable and Payable

How are taxes receivable or payable classified in the statement of financial position?

As non-current assets
As current assets (correct)
As non-current liabilities
As current liabilities

Why are current tax assets and liabilities often offset in the statement of financial position?

Because they are never separately recognized and measured
Because companies have legally enforceable right to set them off (correct)
Because it simplifies the financial reporting process
Because they are not considered significant to be separately recognized

Where is the net deferred tax asset or net deferred tax liability reported in the statement of financial position?

In the current assets section
In the non-current liabilities section (correct)
In the non-current assets section
In the current liabilities section

What is the accounting method that allocates a company's total income tax expense for a particular period to different parts of the income statement?

Intraperiod tax allocation (A) Signup and view all the answers

Where do companies allocate income tax expense (or benefit) according to intraperiod tax allocation?

To continuing operations, discontinued operations, and other comprehensive income (D) Signup and view all the answers

What may be included as components of income tax expense (benefit) in the income statement?

Current tax expense, deferred tax liabilities, and deferred tax assets (C) Signup and view all the answers

How are deferred tax assets and deferred tax liabilities treated in the statement of financial position?

They are separately recognized and measured but may be offset (B) Signup and view all the answers

What is meant by the term 'offset' in the context of taxes receivable or payable?

It means combining taxes receivable and taxes payable into a single line item in the statement of financial position (D) Signup and view all the answers

Why is intraperiod tax allocation considered important in financial reporting?

It provides transparency in disclosing the impact of taxes on different parts of the income statement (B) Signup and view all the answers

What is the rationale behind reporting the net deferred tax asset or net deferred tax liability in the non-current section of the statement of financial position?

To highlight their significance for future periods rather than current operations (C) Signup and view all the answers

Match the following with their presentation in the statement of financial position:

Current tax assets and liabilities = Reported separately but often offset Deferred tax assets and liabilities = Reported separately and may be offset Net deferred tax asset or net deferred tax liability = Reported in the non-current section Taxes receivable or payable = Classified as current assets or current liabilities Signup and view all the answers

Match the following with their allocation in the income statement according to intraperiod tax allocation:

Income tax expense (or benefit) = Allocated to continuing operations, discontinued operations, other comprehensive income, and prior period adjustments Current tax expense (benefit) = One of the components of income tax expense (benefit) Deferred tax assets and liabilities = Not directly allocated but reported separately Net deferred tax asset or net deferred tax liability = Not directly allocated but reported in non-current section Signup and view all the answers

Match the following concepts with their importance in financial reporting:

Intraperiod tax allocation = Method that provides detailed breakdown of income tax expense in income statement Offsetting current tax assets and liabilities = Practice with legal enforceable right that affects presentation in statement of financial position Reporting net deferred tax asset or net deferred tax liability = Indication of long-term tax impact and financial position Classifying taxes receivable or payable = Affects liquidity assessment and short-term financial position Signup and view all the answers

Match the following terms with their meaning in the context of taxes receivable or payable:

Offset = Legal right to set off current tax asset against current tax liability Current tax assets and liabilities = Often offset in the statement of financial position due to legal enforceable right Deferred tax assets and liabilities = Separately recognized and measured but may be offset Net deferred tax asset or net deferred tax liability = Result of recognizing and measuring deferred tax assets and liabilities Signup and view all the answers

Financial Statement Presentation: Taxes Receivable and Payable

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