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

question 18

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 20%.
Required:
Provide the journal entry to reflect the tax rate change.

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Definitions:

Purchase Price

The amount paid to acquire an asset or service.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Strike Price

The price at which the holder of an option can execute the contract to buy (call) or sell (put) the underlying asset.

Stock Price

The current price at which a single share of a company's stock can be bought or sold in the financial markets.