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Home Q & A Board Other Fields Homework Help Business Accounting
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loeinjhonson loeinjhonson
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Posts: 189
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5 years ago
Refer to question 120 above. How (if at all) would your answer change if the tax rate for all years
2011 and beyond were enacted in 2011?
Textbook 
Intermediate Accounting, Volume 2

Intermediate Accounting, Volume 2


Edition: 5th
Authors:
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wrote...
#1
5 years ago
In this case, the tax rates for years 2012 would be known in 2011. Since this temporary
difference will reverse out after 2011, the deferred income tax asset would be valued at the rate
that is expected to be in effect when the reversal is complete. In this case, the rate in effect will be
35%, thus, the difference between the tax and accounting bases calculated in question 120 above,
which was $200,000, will be multiplied by 35%. Thus the deferred income tax asset in this case
will be valued at $70,000 ($200,000*35%).
loeinjhonson Author
wrote...
#2
5 years ago
Electric Light Bulb Correct, thanks!
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