Question
5. Watson Co. reported a DTA in the amount of $240,000 resulting from an estimated warranty expense accrual for book purposes. The total book-tax difference
5. Watson Co. reported a DTA in the amount of $240,000 resulting from an estimated warranty expense accrual for book purposes. The total book-tax difference related to the estimated warranty liability is $600,000. Effective immediately, the enacted statutory tax rate changed from 40% to 35%. What amount, if any, Watson co. should record in its books to adjust for this change in tax rates?
A. $30,000
B. $240,000
C. $210,000
D. No adjustment is necessary.
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Introduction To Statistical Investigations
Authors: Beth L.Chance, George W.Cobb, Allan J.Rossman Nathan Tintle, Todd Swanson Soma Roy
1st Edition
1118172140, 978-1118172148
