Langtry Corporation began operations in 2009 and appropriately recorded a deferred tax liability at the end of 2009 and 2010 based on the following depreciation temporary differences between pretax financial income and taxable income:

\begin{array}{rrr}& \text { Income Tax } & \text { Financial } \\\text { Year } & \text { Depreciation } & \text { Depreciation }\\2009 & \$ 800 & \$ 400 \\2010 & 600 & 400 \\2011 & 400 & 400 \\2012 & 200 & 400 \\2013 & 0 & 400\end{array}

The income tax rate for 2009 and 2010 was 30%.In February 2011, due to budget constraints, Congress enacted an income tax rate of 35%.The journal entry required to adjust the Deferred Tax Liability account in February 2011 would be
A)

\begin{array}{llr} \text {Loss on Adjustment of Deferred Taxes } &30\\ \text { Deferred Tax Liability} &30\\\end{array}

\begin{array} { l l } \text { Deferred Tax Liability } & 30 \\\text { Gain on Change in Tax Rates } &&30\end{array}

\begin{array} { l r } \text { Income Tax Expense } & 10 \\\text { Deferred Tax Liability } && 10\end{array}

\begin{array}{l}\text { Income Tax Expense } \quad 30\\\text { Deferred Tax Liability } \quad 30\end{array}

On December 31, 2009, Lake Jackson, Inc

Essay

Correct Answer:VerifiedIncome Tax...View AnswerUnlock this answer nowGet Access to more Verified Answers free of chargeView Full Answer For Free

Correct Answer:
Verified
Income Tax...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge