Deferred tax is the tax on temporary differences. Temporary differences are identified on individual assets and liabilities in the statement of financial position. Temporary differences arise when the carrying value of an asset or liability differs from its tax base.

Required:

(i) Explain how MFRS 112 Income Taxes defines the tax base of assets and liabilities. [2 marks]

(ii) Explain how to identify temporary differences as taxable or deductible temporary differences. [4 marks]

(iii) Explain the general criteria prescribed by MFRS 112 for the recognition of deferred tax assets and liabilities. You do NOT need to identify any specific exceptions to these general criteria. [2 marks]