Question 4

Question 4(a)

You are working as an accountant for Jamboree Pty Ltd. Jamboree Pty Ltd has the following deferred tax balances as at 30 June 2021:

Deferred tax asset $600,000

Deferred tax liability $400,000

These balances were calculated when the tax rate was 30%. On 1 August 2021, the Australian Government Announced that it will increase the tax rate to 35%

Your Chief Financial Officer has asked you to comment on the impact of the increase in tax rate to the deferred tax amounts recognised in prior years.

Required

Adjust deferred tax asset and deferred tax liability amounts and explain the impact of increase in tax rate on deferred tax asset and deferred tax liability. Also, include general journal entries in your calculation.

[7 marks]

Solution 4 (a)

Space for calculation

Date	Accounts	Dr	Cr