Question
Grouper Construction Inc uses the completed contract method for tax purposes and the percentage completion method for accounting purposes. assume that on July 15 2023
Grouper Construction Inc uses the completed contract method for tax purposes and the percentage completion method for accounting purposes. assume that on July 15 2023 a new income tax rate is enacted that lowers the corporate rate from 30% to 28% effective January 01, 2025. Grouper Construction Inc has one temporary difference at the beginning of 2023 related to 1.07 million tax deferral from using the completed contract method. Grouper therefore had a deferred tax liability account at January 01, 2023 with a balance of $321000 ($1,070,000 x 30%). The $1,070,000 in gross profit recognized to date is expected to be taxed in 2026. Calculate the deferred tax liability at July 15, 2023 after take into account the change in tax rates.
a. What is the deferred tax liability $
b. What are the Journal Entries related to record on that date
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started