Question

The effect on existing deferred income tax accounts when a change in the tax rate is enacted into law should be Group of answer choices reported as an adjustment to income tax expense in the period of change. applied to all temporary or permanent differences that arise prior to the date of the enactment of the tax rate change, but not subsequent to the date of the change. The tax change should be ignored until the year it is enacted. considered, but it should only be recorded in the accounts if it reduces a deferred tax liability or increases a deferred tax asset.

Answer 1

Answer:

Reported as an adjustment to income tax expense in the period of change

Explanation:

The deferred tax expense is generally defined as an increase in balance of deferred tax liability minus the increase in balance of deferred tax asset. It is an increase in the deferred tax liability balance usually from the beginning to the end of the accounting period.

The taxable income of a corporation is simply different from accounting income due to the fact that companies use the full accrual method for financial reporting but use the modified cash basis for tax reporting.

Tax is commonly defined as an involuntary charge imposed by the government to provide revenue for government which are use for development of public institution,roads and others. Tax laws are enacted to regulate, monitor payment of tax.