Comprehensive 2 Flashcards
1
Q
In calculating the tax effect of temporary differences, which rates are used under GAAP and IFRS?
A
GAAP uses enacted tax rate.
IFRS uses substantially enacted (possibly future) tax rate
2
Q
What is the test to see if an item is material or relevant?
A
If it will influence a user of financial statements in making investment or credit decisions in relation to the reporting entity.
3
Q
If a patent is successfully defended in litigation is the cost expensed or capitalized, and why?
A
It is capitalized because it is added to the cost of the patent. If it is a loss it is an expense because the owner may no longer have the rights to the patent.
