Tax rates other than the current tax rate may be used to calculate the future income tax amount on the SFP if

Question

Quizplus · Accepted Answer

Tax rates other than the current tax rate may be used to calculate the future income tax amount on the SFP only if the future income tax rates have been enacted or substantively enacted into law. This is based on the principle of accrual accounting which requires an entity to account for its obligations as and when they arise rather than when they are paid. Therefore, if it is probable that a future income tax rate change will occur or it appears likely that a future income tax rate will be higher or less than the current tax rate, it cannot be used for the calculation until it is substantively enacted into law.

Tax Rates Other Than the Current Tax Rate May Be