QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

65. - MOCK AND SAMPLE EXAMS CFA CFA LEVEL I MOCK EXAM AFTERNOON 2013
MOCK AND SAMPLE EXAMS CFA CFA LEVEL I MOCK EXAM AFTERNOON 2013
65. A company purchased equipment in 2010 for £25,000. The year-end values of the equipment for accounting purposes and tax purposes are as follows: 2011 2010 Carrying amount for accounting purposes £20,000 £22,500 Tax base for tax purposes £16,000 £20,000 Tax rate 25% 30% Which of the following statements best describes the effect of the change in the tax rate on the company’s 2011 financial statements? The deferred tax liability: A. increases by £250. B. decreases by £200. C. decreases by £800.