A company has a $50,000 deferred tax liability related to accelerated depreciation
A company has a $50,000 deferred tax liability related to accelerated depreciation. If the tax rate increases from 25% to 30%, the deferred tax liability becomes:
A. $50,000
B. $60,000
C. $75,000
D. $80,000
Answer: B
Explanation: Original liability = $50,000 = Taxable temporary difference × 25%. Taxable temporary difference = $50,000 / 25% = $200,000. New liability = $200,000 × 30% = $60,000.
