The Perfect Pear has a deferred tax liability of $$20,000$ at the beginning of the fiscal year relating to a taxable temporary difference of $$80,000.$ The current year tax rate is $30\%.$

REQUIRED. Provide the journal entry to reflect the tax rate change.

The tax rate associated with the deferred tax liability was $$20,000/$ $$80,000=25\%.$ Thus, the tax rate increased by $5\%.$

Debit Credit