As a manager at Sage Accounting, Becky and yourself are assigned to an engagement related to the audit of Fine Co's financial statements. Becky is a manger as well at Sage Accounting. Your senior has sent Becky and you an income tax workpaper that your team has prepared as they audited the tax expense and the related deferred tax asset/liability. Becky calls you a few hours after receiving the workpaper wanting to discuss the presentation of the DTL and DTA on the financial statement. In the workpaper the client has reported the DTA and DTL as a current asset and current liabilities section of the financial statement. The senior on the engagement had requested an inquiry of the client on why the DTA and DTL was presented as a current asset/liability. The response from the client was as follows: "The company's DTA was paid during the current year and the company expects to reverse out the DTA in the upcoming year." Becky believes this is the wrong call and it should not be presented in current assets no matter what. According to the Accounting Standards Codification, what should the DTA and DTL be classified and what is the ASC reference for the treatment of DTA and DTL? Based on your research in ASC, why does it make sense to treated DTA and DTLs as noted in the ASC? (You must cite the reference numbers in ASC.)

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as per asc 740 defferd tax asset to be recognised in non current ... View the full answer