Question
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 Credit
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