Pls explain the treatment of DL when tax rate rises
Share
Please briefly explain why you feel this question should be reported.
Please briefly explain why you feel this answer should be reported.
Please briefly explain why you feel this user should be reported.
DEFFERED TAX LIABILITY IS NOT A BASE TO CALCULATE THE ASMOUNT BUT IT IS THE FINAL AMOUNT
THEREFORE WE WOULD HAVE TO FIRST GET BACK TO THE BASE AMOUNT BY DIVIDING THE DTL BY 30% WHICH COMES OUT TO 4000000
NIW THE TAX RATE CHANGES TO 40% FROM 30% SO THE DEFFERED TAX LIABILITY WILL INCREASE
TO FIND THE NEW DEFFERED TAX LIABILITY 4000000X40%= 1600000
HENCE THE CHAND=GE IN DTL WILL BE 1600000-1200000=400000 THEREFORE THE ANSWER IS OPTION B