Asked Jan 10, 2020

Addison Co. has one temporary difference at the beginning
of 2017 of $500,000. The deferred tax liability
established for this amount is $150,000, based on a tax
rate of 30%. The temporary difference will provide the
following taxable amounts: $100,000 in 2018, $200,000
in 2019, and $200,000 in 2020. If a new tax rate for 2020
of 20% is enacted into law at the end of 2017, what is
the journal entry necessary in 2017 (if any) to adjust
deferred taxes?


Expert Answer

Step 1

Prepare the necessary journal entry in 2017to adjust deferred taxes.

Accounting homework question answer, step 1, image 1
Step 2
Accounting homework question answer, step 2, image 1

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