Question
Bronson Industries reported a deferred tax liability of $19.2 million for the year ended December 31, 2015, related to a temporary difference of $48 million.
Bronson Industries reported a deferred tax liability of $19.2 million for the year ended December 31, 2015, related to a temporary difference of $48 million. The tax rate was 40%. The temporary difference is expected to reverse in 2017 at which time the deferred tax liability will become payable. There are no other temporary differences in 20152017. Assume a new tax law is enacted in 2016 that causes the tax rate to change from 40% to 30% beginning in 2017. (The rate remains 40% for 2016 taxes.) Taxable income in 2016 is $86 million. |
Required: |
1. & 2. | Determine the effect of the change and prepare the appropriate journal entry to record Bronsons income tax expense in 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) | ||||||||
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