Exercise 20-15 (Algo) Deferred taxes; change in tax rates [LO20-4]

Bronson Industries reported a deferred tax liability of $9.0 million for the year ended December 31, 2020, related to a temporary difference of $36 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax liability will become payable. There are no other temporary differences in 20202022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 20% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $92 million. Required: 1. Determine the effect of the change and prepare the appropriate journal entry to record Bronsons income tax expense in 2021.