A company has a $50,000 deferred tax liability related to depreciation

A company has a $50,000 deferred tax liability related to depreciation

A company has a $50,000 deferred tax liability related to depreciation. If the tax rate decreases from 30% to 25%, the deferred tax liability becomes:

A. $41,667

B. $50,000

C. $58,333

D. $60,000

Answer: A

Explanation: Taxable temporary difference = $50,000 / 30% = $166,667. New liability = $166,667 × 25% = $41,667.