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Ellwood Ltd has the following deferred tax balances in its statement of financial position at 30 June 2012. Deferred tax asset $1,000,000 Deferred tax liability
Ellwood Ltd has the following deferred tax balances in its statement of financial position at 30 June 2012.
Deferred tax asset $1,000,000
Deferred tax liability $ 800,000
The above balances were calculated when the tax rate was 30%. On 1 December 2012 the government raises the company tax rate to 35%.
Required
- Provide the journal entries to adjust the carry forward balances of the deferred tax asset and the deferred tax liability.
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