B Coreported a Deferred Tax Liability of $24 Million for the the Year

B Co.reported a deferred tax liability of $24 million for the year ended December 31,2015,related to a temporary difference of $60 million.The tax rate was 40%.The temporary difference is expected to reverse in 2017 at which time the deferred tax liability will become payable.There are no other temporary differences in 2015-2017.Assume a new tax law is enacted in 2016 that causes the tax rate to change from 40% to 30% beginning in 2017.(The rate remains 40% for 2016 taxes. )Taxable income in 2016 is $90 million.
Required:
Determine the effect of the change and prepare the appropriate journal entry to record B's income tax expense in 2016.What adjustment,if any,is needed to revise retained earnings as a result of the change?

Correct Answer:

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A deferred tax liability is established ...

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