At December 31,2015,the Rare Corporation reported a $40,000 deferred tax liability pertaining to a $100,000 temporary difference which will reverse equally during the next four years.On December 31,2015,after determining the deferred tax liability,Rare's management was informed that the income tax rate for years subsequent to 2015 had been changed to 42%.As a result of the tax rate change,Rare's 2015 income tax expense will

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$100,000 × 2% [42% - 40% ($40,000/$100,000)] = $2,000 increase in the deferred tax liability which increases income tax expense.

At December 31,2015,the Rare Corporation Reported a $40,000 Deferred Tax