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Question
On January 1, 2012, Sun Company's balance sheet reported a deferred tax liability of $185,000 and a deferred tax asset of $99,900. The future taxable amounts that existed as of January 1, 2012 will reverse equally over the next four years beginning in 2012, while the future deductible amounts that existed as of January 1, 2012 will reverse equally over the next three years beginning in 2012. The enacted income tax rate for all tax years as of January 1, 2012 was 37%. On February 1, 2012, the tax laws were amended resulting in income tax rates of 38% for 2012 and 2013; the income tax rate will be 40% for tax years 2014 and later.
Requirement:
Prepare the journal entry on February 1, 2012 to record the impact of the amended income tax rates.
Answer
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