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

Bronson Industries reported a deferred tax liability of $10.0 million for the year ended December 31, 2020, related to a temporary difference of $40 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 $100 million. Required: 1. Determine the effect of the change and prepare the appropriate journal entry to record Bronsons income tax expense in 2021. 2. Is Bronson required to revise prior years financial statements as a result of the change? 3. Is Bronson required to provide a disclosure note to report the change?