Hermann Company analyzed its temporary differences as of December 31, 2011. The enacted tax rate was 35%
Question:
Hermann Company analyzed its temporary differences as of December 31, 2011. The enacted tax rate was 35% for 2011 and all future tax years.
The total amount of taxable temporary differences as of the end of 2011 was $540,000. All the temporary differences relate to noncurrent items.
Instructions:
1. Assume that in early 2012 the taxing authority changed the rates for 2012 and beyond to 30%. Prepare the 2012 journal entry to record the tax rate decrease.
2. Assume that instead of being decreased, the tax rate was increased to 40% in early 2012. Prepare the 2012 journal entry to record the tax rate increase.
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Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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