CFA CFA Level 1 Carrying Amount Vs. Tax Base

Carrying Amount Vs. Tax Base

  • Author
    Posts
    • Avatar of MJB91MJB91
      Participant
        • CFA Level 2
        Up
        5
        ::

        Because the inventory has been expensed it will be taxable on the income statement. As for tax purposes it has been capitalized it will not be subject to the same levels of tax within the first year. This will create deferred tax asset as you have paid tax in year 1 due to expensing. Does that make sense?

    Viewing 0 reply threads
    • You must be logged in to reply to this topic.