Question
A company had a temporary difference at the end of 2020 related to $200 of future...
A company had a temporary difference at the end of 2020 related to $200 of future deductible amounts. In December of 2020, a new income tax act is signed into law that increases the corporate rate from 30% to 40%, effective January 1, 2021. The company should (enter 1, 2, 3, or 4 that represents the correct answer):
1. Debit Income Tax Expense by $20.
2. Debit Deferred Tax Liability by $20.
3. Credit Deferred Tax Asset by $20.
4. Credit Income Tax Expense by $20.
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Answer #1
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