Trazmont is taxed under a graduated scale (case data): 15% up to 200,000 of taxable profit, 25% from 200,000 to 600,000 and 30% above. Its expected taxable profit for the year of reversal is 800,000. It has a taxable temporary difference of 120,000 that will reverse in that year. Compute the expected average rate and the deferred tax liability.
- Expected taxable profit of the year of reversal
- 800,000
- Taxable temporary difference
- 120,000