Reference no: EM132586747

Question i). Are the following statements true or false, according to IAS12 Income taxes? If false give correct answer.
(1) Development costs have been capitalised and will be amortised, but were deducted in determining taxable profit in the period in which they were incurred. This will give rise to a deferred tax asset.

(2) The tax base for a machine for tax purposes is greater than the carrying amount in the financial statements up to the end of the reporting period. This will give rise to a deferred tax asset.

Question ii). According to IAS12 Income taxes, are the following statements in relation to deferred tax liabilities true or false? If false give correct answer.

(1) Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.

(2) Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible temporary differences.

Question iii). The Giggs Company has interest receivable which has a carrying amount of Tk. 55,000 in its statement of financial position at 31 December 2017. The related interest revenue will be taxed on a cash basis in 2018. Giggs has trade receivables that have a carrying amount of Tk.100,000 in its statement of financial position at 31 December 2017. The related revenue has been recognized in profit or loss for the year to 31 December 2017. According to IAS12 Income taxes, what is the total tax base of interest receivable and trade receivables for Giggs at 31 December 2017?