Explanation

Let's analyze each statement:

Statement A: "Deferred tax assets occur when the tax base of an asset is lower than its carrying amount"

• This is incorrect. Deferred tax assets actually occur when:
  • The tax base of an asset is higher than its carrying amount
  • Or when the tax base of a liability is lower than its carrying amount
• Deferred tax assets represent future tax benefits that will reduce future tax payments.

Statement B: "A company's current tax liability is the amount payable in taxes and is based on current taxable income"

• This is correct. Current tax liability represents:
  • Taxes payable for the current period
  • Based on taxable income calculated according to tax laws
  • Reported on the balance sheet as a current liability

Statement C: "Deferred tax liabilities occur when regulatory income tax expense is greater than accounting income tax expense"

• This is incorrect. Deferred tax liabilities occur when:
  • The tax base of an asset is lower than its carrying amount
  • Or when the tax base of a liability is higher than its carrying amount
• The statement confuses the relationship between regulatory and accounting income tax expense.

Key Concepts:

• Current tax liability: Taxes payable based on current period's taxable income
• Deferred tax assets: Future tax benefits (tax base > carrying amount for assets, or tax base < carrying amount for liabilities)
• Deferred tax liabilities: Future tax payments (tax base < carrying amount for assets, or tax base > carrying amount for liabilities)

Statement B is the only completely accurate statement among the three options.