A Company Has a Deferred Tax Liability of $112,500 at the Beginning

question 4

Essay

A company has a deferred tax liability of $112,500 at the beginning of the fiscal year relating to a taxable temporary difference of $450,000.The tax rate for the year increased from 25% to 35%.
Requirement:
Provide the journal entry to reflect the tax rate change.

---

Definitions:

Goodwill Recognition

The process of accounting for the excess of purchase price over the fair value of identifiable assets and liabilities of an acquired entity.

US GAAP

United States Generally Accepted Accounting Principles, the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC).

IFRS

International Financial Reporting Standards, a set of accounting guidelines that govern how financial statements are prepared worldwide.

Reporting Units

Entities for which discrete financial information is available and reviewed by the segment manager to make operating decisions.