Answer to Question #209845 in Management for hamza khan

Question

Company A has a taxable temporary difference of Rs. 100,000 in relation to its plant and equipment at the end of 2013. The tax rate is 30% for 2013 and 25% from 2014 onwards (these rates were substantively enacted prior to 2013). In January 2014, the government announces a change in rate to 20% from 2015 onwards, which is substantively enacted during 2014. At what amount is the deferred tax liability measured at the end of 2013? (2 Points) 

30,000 (100,000 x 30%) 

 25,000 (100,000 x 25%) 

20,000 (100,000 x 20%)

need to schedule the reversal of the temporary difference into that amount reversing in 2014 and in 2015 or later

Answer 1

25,000 (100,000 x 25%)