On December 31, 2014, the Town Hall Company had a deferred tax liability balance of $12,570, arising from an excess of MACRS depreciation for tax purposes over straight-line depreciation for accounting purposes. The tax effects of that timing difference are expected to reverse in the following years:
On January 27, 2015, Congress raised the effective income tax rate to 38% for all future years, including the current year, 2015.
Required:
Prepare the entry to record any adjustments necessary due to the income tax rate increase on January 27, 2015.

Question

On December 31, 2014, the Town Hall Company had a deferred tax liability balance of $12,570, arising from an excess of MACRS depreciation for tax purposes over straight-line depreciation for accounting purposes. The tax effects of that timing difference are expected to reverse in the following years: 
 On January 27, 2015, Congress raised the effective income tax rate to 38% for all future years, including the current year, 2015.
Required:
Prepare the entry to record any adjustments necessary due to the income tax rate increase on January 27, 2015.

Quizplus · Accepted Answer

The Answer of On December 31, 2014, the Town Hall Company had a deferred tax liability balance of $12,570, arising from an excess of MACRS depreciation for tax purposes over straight-line depreciation for accounting purposes. The tax effects of that timing difference are expected to reverse in the following years: 
 On January 27, 2015, Congress raised the effective income tax rate to 38% for all future years, including the current year, 2015.
Required:
Prepare the entry to record any adjustments necessary due to the income tax rate increase on January 27, 2015.

On December 31, 2014, the Town Hall Company Had a Deferred