CERTYNEX IFRS ACADEMY

Nectaval's deferred tax liability increased by 70,000: 40,000 from accelerated tax depreciation and 30,000 from a land revaluation recognised in other comprehensive income. The accountant recorded a single entry: deferred tax expense 70,000 / deferred tax liability 70,000. Where is the error?

The liability should not have increased: a land revaluation creates no temporary difference.

The expense should have been 40,000 and the liability only 40,000.

The liability should have been deducted from the carrying amount of the land.

The expense in profit or loss is overstated: 30,000 belongs in other comprehensive income.