Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when the cash is collected. In 2020, Superior sold lots for $120 million for which no cash was collected at the time of the sale. This cash will be collected equally over 2021 and 2022. The enacted tax rate was 40% at the time of the sale. In 2021, a new tax law was enacted, revising the tax rate from 40% to 30% beginning in 2022. Calculate the total amount by which Superior should change its deferred tax liability in 2021. (Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) The deferred tax liability will million.
Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when the cash is collected. In 2020, Superior sold lots for $120 million for which no cash was collected at the time of the sale. This cash will be collected equally over 2021 and 2022. The enacted tax rate was 40% at the time of the sale. In 2021, a new tax law was enacted, revising the tax rate from 40% to 30% beginning in 2022. Calculate the total amount by which Superior should change its deferred tax liability in 2021. (Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) The deferred tax liability will million.
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 37P
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Transcribed Image Text:Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting
purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when the cash is collected. In 2020,
Superior sold lots for $120 million for which no cash was collected at the time of the sale. This cash will be collected equally over 2021
and 2022. The enacted tax rate was 40% at the time of the sale. In 2021, a new tax law was enacted, revising the tax rate from 40% to
30% beginning in 2022.
Calculate the total amount by which Superior should change its deferred tax liability in 2021. (Enter your answer in millions rounded
to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)
The deferred tax liability will
million.
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