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Question - As of 1 January 2020, the brought forward amount of deferred tax liability of Jade Bhd was RM5,000. As of 31 December 2020, the amount of taxable temporary difference and profit before tax for the year for the company amounted to RM50,000 and RM500,000 respectively. Income tax rate for the current year is 28%.
Due to of the effect of the COVID-19 pandemic, many companies were forced to suspend their operation. Thus, the government decided to reduce the income tax rate from 28% to 25% for 2021.
Required - Explain the effect of changes in the income tax rate on Jade Bhd in relation to MFRS 112 Income Taxes for year 2020.
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