Question

mun vet ltd has the following tax balance as at 30 June 2018 differed tax asset 250,000 deferred tax liability 280,000 The balance were calculated when the tax rate was 30%. on 30 September 2018, the government announced a change to the company tax rate to 27%, effective immediately. what is the journey entry the carry forward balances of the deferred tax asset and deferred tax liability?  

Answer 1

Solution:

Mun Vet Ltd
Journal Entries
Date	Particulars	Debit	Credit
30-Sep-18	Deferred tax liability Dr ($280,000*3%/30%)	$28,000.00
	To Deferred tax assets ($250,000*3%/30%)		$25,000.00
	To Income tax expense		$3,000.00
	(To record adjustment to deferred taxes due to change in tax rate)