Your fellow student was playing ‘Angry Birds’ on a mobile phone in the lecture theatre when they suddenly stopped, looked up at you and said, ‘Deferred tax liabilities and assets should be measured using a discounted cash flow model. The deferred tax is paid or refunded in the future — that could be years away — so the time value of money should be taken into account.’

Refer to AASB 112 and comment on your fellow student’s argument. Identify other assets and liabilities where discounting is required in the measurement approach.

Answer rating: 100% (QA)

Paragraph 53 states that deferred tax assets and liabilities shall not be discounted The expected increase decrease in tax to be paid in future period... View the full answer