Look at the wording of Ques. They have not asked "DTL to be created" Rather, they are asking "DTL to be shown" which means we'll find out the accumulated balance of DTL at end of each year. In 2002 DTL of $10 to be created. In 2003, nothing will happen. In 2004, DTL of $10 will reverse.Read more
Look at the wording of Ques. They have not asked “DTL to be created”
Rather, they are asking “DTL to be shown” which means we’ll find out the accumulated balance of DTL at end of each year.
In 2002 DTL of $10 to be created. In 2003, nothing will happen. In 2004, DTL of $10 will reverse.
Now, lets look at closing balances each year :
31 Dec, 2002 : DTL of $10 (bcoz created this year)
31 Dec, 2003 : DTL of $10 (bcoz old DTL of 2002 is carried forward)
31 Dec, 2004 : DTL is Zero (bcoz it is reversed in this year)
You're thinking it wrong. Just visualize the Timeline in your brain. And, remember that our calculator is pre-default set at End of year mode. If they are depositing from One year from now, it means at the end of Current year. End of current year is nothing but T1. They need money at end of 20th yeaRead more
You’re thinking it wrong. Just visualize the Timeline in your brain. And, remember that our calculator is pre-default set at End of year mode.
If they are depositing from One year from now, it means at the end of Current year. End of current year is nothing but T1. They need money at end of 20th year (not beginning of 20th year). This way “N” will be exactly 20 only (not 19).
Let me put it in another scenario to help you get it better (not related to ques., just for better clarity) :
If they would’ve started depositing at the beginning of Current year (i.e. at T0) rather than End of year, then you have to apply same storkes on calculator (i.e. taking N=20), but now the value will come at Beginning of 20th year, so you will have to compound it one more time to make it reach “End of 20th year”
Tip : always solve TVM questions visualising a timeline in your brain.
Income Taxes FRA
Look at the wording of Ques. They have not asked "DTL to be created" Rather, they are asking "DTL to be shown" which means we'll find out the accumulated balance of DTL at end of each year. In 2002 DTL of $10 to be created. In 2003, nothing will happen. In 2004, DTL of $10 will reverse.Read more
Look at the wording of Ques. They have not asked “DTL to be created”
Rather, they are asking “DTL to be shown” which means we’ll find out the accumulated balance of DTL at end of each year.
In 2002 DTL of $10 to be created. In 2003, nothing will happen. In 2004, DTL of $10 will reverse.
Now, lets look at closing balances each year :
31 Dec, 2002 : DTL of $10 (bcoz created this year)
31 Dec, 2003 : DTL of $10 (bcoz old DTL of 2002 is carried forward)
31 Dec, 2004 : DTL is Zero (bcoz it is reversed in this year)
Thus, “C” is correct.
Hope it was helpful to you!
See lessTVM Doubt
You're thinking it wrong. Just visualize the Timeline in your brain. And, remember that our calculator is pre-default set at End of year mode. If they are depositing from One year from now, it means at the end of Current year. End of current year is nothing but T1. They need money at end of 20th yeaRead more
You’re thinking it wrong. Just visualize the Timeline in your brain. And, remember that our calculator is pre-default set at End of year mode.
If they are depositing from One year from now, it means at the end of Current year. End of current year is nothing but T1. They need money at end of 20th year (not beginning of 20th year). This way “N” will be exactly 20 only (not 19).
Let me put it in another scenario to help you get it better (not related to ques., just for better clarity) :
If they would’ve started depositing at the beginning of Current year (i.e. at T0) rather than End of year, then you have to apply same storkes on calculator (i.e. taking N=20), but now the value will come at Beginning of 20th year, so you will have to compound it one more time to make it reach “End of 20th year”
Tip : always solve TVM questions visualising a timeline in your brain.
Hope it will help you!
See less