When a change in the tax rate is enacted, the effect is reported as an adjustment to income tax payable in the period of the change.

Question

Quizplus · Accepted Answer

The effect of a change in the tax rate is reported as an adjustment to deferred tax assets and liabilities, not directly to income tax payable. This adjustment reflects the change in the future tax consequences of existing temporary differences and is recognized in the period the tax rate change is enacted.

When a Change in the Tax Rate Is Enacted, the Effect