Gaudrisse discovers that a restoration provision of 200,000 should have been recognised in a prior period; it corrects the error by restating the opening balance of retained earnings. Under the legislation in the case, the expense will be deductible when the restoration is carried out, and the related deferred tax asset is recoverable at a rate of 25%. Compute the tax effect and the net adjustment to the opening balance.
- Provision omitted in a prior period
- 200,000
- Rate (%)
- 25 %