Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

saved B Co. reported a deferred tax liability of $22.8 million for the year ended December 31, 2020, related to a temporary difference of $57

saved B Co. reported a deferred tax liability of $22.8 million for the year ended December 31, 2020, related to a temporary difference of $57 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 2020-2022. 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 $87 million. Required: Determine the effect of the change and prepare the appropriate journal entry to record B's income tax expense in 2021. (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 2 decimal places (.e., 5,500,000 should be entered as 5.50).) View transaction list Journal entry worksheet Record the income tax expense in 2021. Note: Enter debits befire credits. Event 1 General Journal Debit Creditimage text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 1 Chapters 1 To 12

Authors: J. David Spiceland, James F. Sepe, Lawrence A. Tomassini, Mark W. Nelson

5th Edition

0073324655, 9780073324654

More Books

Students also viewed these Accounting questions