Which of the following statements is correct with respect to AIS 12 Income Taxes when a non-current asset is revalued?
A) On revaluation date, the revaluation reserve is increased by the product of the temporary difference and the tax rate.
B) On revaluation date, the revaluation reserve is decreased by the product of the temporary difference and the tax rate.
C) On revaluation date, a deferred tax liability is created equal to the amount of the temporary difference.
D) On revaluation date, a deferred tax asset is created equal to the amount of the temporary difference.
Correct Answer:
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