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At end of the financial year Greenhill Ltd. has Accrued Employee Entitlements (Long Service Leave)...

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Accounting

At end of the financial year Greenhill Ltd. has Accrued Employee Entitlements (Long Service Leave) with a carrying value of $400,000 but the tax base is nil. Tax rate is 30%. For the purposes of tax effect accounting, which one of the following entries is required? Select one: a. DR Deferred Tax Asset $120,000 CR Income Tax Expense $120,000 b. DR Income Tax Expense $120,000 CR Deferred Tax Liability $120,000 c. DR Income Tax Expense $120,000 CR Deferred Tax Asset $120,000 Incorrect d. DR Deferred Tax Asset $400,000 CR Income Tax Expense $400,000

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