Question
Winter Corporation starts the year with a cumulative unfavorable temporary difference (due to accrued warranties) of $100,000. During the year, the enacted tax rate on
Winter Corporation starts the year with a cumulative unfavorable temporary difference (due to accrued warranties) of $100,000. During the year, the enacted tax rate on Winter Corporation decreases from 35% to 21%; however, book and tax depreciation are equal and the cumulative temporary difference does not change. What journal entry would Winter Corporation record for deferred taxes this year?
a. | Debit Deferred tax asset $14,000 Credit Deferred tax liability $14,000
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b. | Debit Deferred tax asset $14,000, Credit Deferred Income tax expense $14,000
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c. | Debit Deferred income tax expense. $14,000, Credit Deferred tax asset $14,000
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d. | No journal entry required
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