If a tax rate change from 30% to 25% results in an adjustment to the deferred tax liability account of $50 000,what is (a)the amount of the temporary differences and (b)the type of temporary differences?

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The adjustment to the deferred tax liability account due to a change in tax rate indicates the presence of taxable temporary differences. The amount of the temporary differences can be calculated by dividing the change in the deferred tax liability ($50,000) by the change in the tax rate (5%, or 0.05), resulting in $1,000,000.

If a Tax Rate Change from 30% to 25% Results