A Company Has a Deferred Tax Liability of $20,000 at the Beginning

question 26

Essay

A company has a deferred tax liability of $20,000 at the beginning of the fiscal year relating to a taxable temporary difference of $80,000. The current year tax rate is 30%.
Required:
Provide the journal entry to reflect the tax rate change.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded over time for fixed assets, signifying the reduction in their value.

Fair Value

An estimated market value of an asset or liability based on current market prices or valuations of similar instruments.

Mortgage

A loan secured by real property, typically paid back with interest over a long period, used by individuals and businesses to purchase real estate.

Allowance Account

An account used in accounting to record reductions in the carrying amount of accounts receivable, due to potential or estimated uncollectible debts.