Fauvrenne issues a convertible loan for 1,000,000; the liability component is measured at 880,000, the balance being the equity component. Under the legislation in the case, the tax base of the liability component equals the total issue proceeds. At a rate of 25%, compute the deferred tax liability and the equity component net of tax.
- Issue proceeds
- 1,000,000
- Liability component
- 880,000
- Rate (%)
- 25 %