When Congress makes a tax law or rate change, a corporation recognizes financial statement impact by adjusting the deferred assets or liabilities as of the beginning of the year in which the change is made.

Question

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When Congress enacts a tax law or rate change, corporations must adjust their deferred tax assets and liabilities to reflect the new rates. This adjustment is recognized in the financial statements for the year in which the change is enacted, not when the change goes into effect, to reflect the current and future financial impact of the change in tax law.

When Congress Makes a Tax Law or Rate Change, a Corporation