At December 31, 2014 Raymond Corporation reported a deferred tax liability of $180,000 which was attributable to a taxable type temporary difference of $600,000. The temporary difference is scheduled to reverse in 2018. During 2015, a new tax law increased the corporate tax rate from 30% to 40%. Raymond should record this change by debiting

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The increase in the tax rate from 30% to 40% means the deferred tax liability should be adjusted to reflect the new rate. The original deferred tax liability was calculated at 30% of $600,000, which is $180,000. At the new rate of 40%, the liability would be 40% of $600,000, which is $240,000. The difference of $60,000 ($240,000 - $180,000) should be recorded as an increase in the deferred tax liability and charged to Income Tax Expense.

At December 31, 2014 Raymond Corporation Reported a Deferred Tax