Galway Corp. prepares its financial statements in accordance with IFRS. Which of the following is true regarding reporting Galway’s deferred income taxes in its year 4 financial statements?
A) Deferred taxes of one jurisdiction are offset against another jurisdiction in the netting process.
B) Deferred tax assets are always netted with deferred tax liabilities to arrive at one amount presented on the balance sheet.
C) Deferred tax assets and liabilities may only be classified as noncurrent.
D) Deferred tax assets and liabilities are classified as current and noncurrent based on their expiration dates.
Choice C is correct because IFRS does not permit deferred tax assets or liabilities to be classified as current. Therefore, deferred tax assets and liabilities are reported in the noncurrent section of the statement of financial position. Choice A is incorrect because IFRS does not allow companies to mix deferred taxes for different jurisdictions. For example, a multinational corporation that operates both in the U.S. and England could not combine its deferred tax from the U.S. with deferred tax from its operation in England. Choice B is incorrect because that is not always the case. If a company have deferred tax assets or deferred tax liabilities from two different jurisdictions for example it could not net the deferred tax liabilities and assets. D is incorrect because IFRS does not allow current deferred tax at all.