Amigos Limited has an asset with a carrying value of $60 000. The tax base of this asset is $40 000. The tax rate is 30%. The deferred tax item to be recognised by Amigos Limited is:

Question

Quizplus · Accepted Answer

The difference between the carrying value and tax base of the asset is $20,000 ($60,000 - $40,000). Since the tax rate is 30%, the deferred tax liability will be $6,000 ($20,000 x 30%). Therefore, the correct answer is C, deferred tax liability of $6,000.

Amigos Limited Has an Asset with a Carrying Value of $60