Answered

Get the answers you've been looking for with the help of IDNLearn.com's expert community. Our Q&A platform offers reliable and thorough answers to ensure you have the information you need to succeed in any situation.

Dana Co. had a deferred tax liability balance due to a temporary difference at the beginning of 2019 related to $900,000 of excess depreciation. In December of 2019, a new income tax act is signed into law that lowers the corporate rate from 40% to 30%, effective January 1, 2021. If taxable amounts related to the temporary difference are scheduled to be reversed by $450,000 for both 2020 and 2021, Dana should increase or decrease deferred tax liability by what amount

Sagot :

Abiolataiwo2015idn

Answer:

$45,000 decrease

Explanation:

Calculation to determine the amount that Palmer should increase or decrease deferred tax liability

Increase or decrease deferred tax liability =$450,000 × (.30 - .40)

Increase or decrease deferred tax liability=-$45,000 decrease

Therefore Dana should DECREASE deferred tax liability by $45,000

We appreciate your contributions to this forum. Don't forget to check back for the latest answers. Keep asking, answering, and sharing useful information. Find clear and concise answers at IDNLearn.com. Thanks for stopping by, and come back for more dependable solutions.