Under IAS 1, Presentation of Financial Statements, how must deferred taxes be classified on the balance sheet?
A) As either a current asset or a current liability
B) As either a noncurrent asset or a noncurrent liability
C) As either a current or noncurrent asset or liability based on the expected timing of realization
D) As a separately stated positive or negative component of equity

Question

Quizplus · Accepted Answer

Under IAS 1, deferred taxes must be classified as either a noncurrent asset or a noncurrent liability. This is because they represent the tax consequences of transactions that have already occurred but will impact future periods. Current assets and liabilities represent items that are expected to be settled within 12 months, whereas noncurrent assets and liabilities represent items expected to be settled beyond that timeframe. Therefore, deferred taxes are classified as noncurrent items because their impact will not be realized within the next 12 months.

Under IAS 1, Presentation of Financial Statements, How Must Deferred