On January 1, Year 2, GHI Inc. had accrued $100,000 more sales revenue than it had declared for income tax purposes to date. During Year 2, the company had declared $150,000 more in sales revenues on its Year 2 tax return than it had accrued for that year. The income tax rate for Years 2 and prior was 20%. The tax rate for future years was expected to be 25%. This rate was enacted during Year 2. For Year 2, the temporary differences arising from the above would result in:

Question 40Select one:

a.

an increase to income tax expense of $32,500. A corresponding DTL of $12,500 would also be recorded at the end of Year 2.

b.

a decrease to income tax expense of $32,500. A corresponding DTA of $12,500 would also be recorded at the end of Year 2.

c.

a decrease to income tax expense of $30,000. A corresponding DTA of $10,000 would also be recorded as the end of Year 2.

d.

an increase to income tax expense of $30,000. A corresponding DTL of $10,000 would also be recorded as the end of Year 2.