Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMA Exam CIMAPRA19-F02-1 Topic 5 Question 94 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 94
Topic #: 5
[All CIMAPRA19-F02-1 Questions]

The tax benefit on a company's asset is 180,000 and the useful life on that asset is five years. The company creates a deferred tax provision to spread this benefit over the asset's useful life.

What entry is needed to reduce this deferred tax provision in the company's year two accounts?

Show Suggested Answer Hide Answer
Suggested Answer: B

by Lizbeth at Aug 02, 2024, 01:45 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRA19-F02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel
Lorriane
22 days ago
Hmm, I'm leaning towards F. Reducing the deferred tax liability by the full 144,000 seems like the logical choice here.
upvoted 0 times
...
Ahmed
1 months ago
Haha, this is a tricky one! I bet the answer is something like 'All of the above, plus a dance routine and a plate of nachos.'
upvoted 0 times
Royce
22 days ago
A) DR Deferred tax liability (SOFP) 36,000
upvoted 0 times
...
...
Judy
2 months ago
I'm not sure, but I think it makes sense to credit the deferred tax liability to reduce it in the year two accounts.
upvoted 0 times
...
Phung
2 months ago
I'm going with C. We're reducing the corporation tax expense in the income statement, not the deferred tax liability.
upvoted 0 times
Dorsey
17 days ago
User 2: No, I believe it should be B) CR Deferred tax liability (SOFP) 36,000
upvoted 0 times
...
Dominga
30 days ago
User 1: I think the correct answer is C) DR Corporation tax (income statement) 36,000
upvoted 0 times
...
...
Alease
2 months ago
I agree with Beatriz, because the company needs to reduce the deferred tax provision by recognizing the tax liability on the balance sheet.
upvoted 0 times
...
Hana
2 months ago
Option B looks right to me. We need to reduce the deferred tax liability account, so a credit entry is needed.
upvoted 0 times
Domitila
14 days ago
The entry will help accurately reflect the tax benefit over the useful life of the asset.
upvoted 0 times
...
Arlene
25 days ago
Reducing the deferred tax provision will have an impact on the company's financial statements.
upvoted 0 times
...
Candida
28 days ago
It makes sense to credit the deferred tax liability account in this situation.
upvoted 0 times
...
Lorriane
1 months ago
I agree, option B is the correct entry to reduce the deferred tax provision.
upvoted 0 times
...
...
Beatriz
2 months ago
I think the answer is A) DR Deferred tax liability (SOFP) 36,000.
upvoted 0 times
...

Save Cancel