In 2015 Charmed, Inc. recorded book income of $370,000. The company’s only temporary difference relates to a $60,000 installment sale that it recorded for book purposes; there are no permanent differences. Charmed anticipates receiving payments equally over the following three years. The current enacted tax rate in 2015 is 35%. The substantively enacted tax rates for the following three years are 30%, 35%, and 38%, respectively.

Under IFRS, what deferred tax amount should Charmed record for this temporary difference?

A) $20,000
B) $20,600
C) $21,000
D) $21,600

Answer: B
Explanation: B) (20,000 × 30%) + (20,000 × 35%) + (20,000 × 38%). Topic 740 was amended to follow IFRS guidance if operations are in a non-U.S. taxing jurisdiction.