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

question 17

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%.
Required:
Provide the journal entry to reflect the tax rate change.

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Definitions:

Restructuring

The process of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable or better organized for its present needs.

Divestiture

The action of a company selling or disposing of an asset or subsidiary as a strategic business decision.

Unrelated Diversification

A business strategy whereby a company expands into industries that are not related to its current line of business.

Acquiring New Businesses

The process of a company purchasing or merging with other companies to expand its operations, enter new markets, or gain competitive advantages.