Question

A company has a Deferred Tax Liability of $35,000. Now, the government has just changed the statutory tax rate from 35% to 30% effective immediately. What is the correct journal entry to record the impact of this tax rate change

Answer 1

Answer and Explanation:

The correct journal entry to record the impact of this tax rate change is shown Below:

Income Tax Expense $5,000

     To Deferred Tax Assets $5,000

(being the income tax expense is recorded)

here the income tax expense is debited as it increased the expense and credited the deferred tax assets

So, the same should be considered