Question
An analysis of Food Limited and McBurger Limiteds annual financial statements revealed the following balances for the deferred tax assets (DTAs). 30/6/17 30/6/18 30/6/19 Food
An analysis of Food Limited and McBurger Limited’s annual financial statements revealed the following balances for the deferred tax assets
(DTAs). 30/6/17 30/6/18 30/6/19
Food Limited $140,000 $142,000 $190,000
McBurger Limited $58,000 $42,000 $18,000
In the case of Food Limited, 100% of the DTAs for the year ending 2017 and 2018 were from tax losses and for 2019, 30% were from provision for annual leave and the remaining was from tax losses. McBurger Limited’s DTAs were a result of previous tax losses.
Required:
Comment on the application of the DTAs criteria on the two companies above. Should the companies continue to recognise DTAs based on the given information? Justify your answer?
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it provides that deferred tax assets should only be recognized on unused tax losses or temporary dif...
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Accounting concepts and applications
Authors: Albrecht Stice, Stice Swain
11th Edition
978-0538750196, 538745487, 538750197, 978-0538745482
