Addison Co. has one temporary difference at the beginning of 2020 of $500,000. The deferred tax liability established for this amount is $150,000, based on a tax rate of 30%. The temporary difference will provide the following taxable amounts: $100,000 in 2021, $200,000 in 2022, and $200,000 in 2023. If a new tax rate for 2023 of 20% is enacted into law at the end of 2020, what is the journal entry necessary in 2020 (if any) to adjust deferred taxes?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Addison Co. has one temporary difference at the beginning of 2020 of $500,000. The deferred tax liability established for this amount is $150,000, based on a tax rate of 30%. The temporary difference will provide the following taxable amounts: $100,000 in 2021, $200,000 in 2022, and $200,000 in 2023. If a new tax rate for 2023 of 20% is enacted into law at the end of 2020, what is the journal entry necessary in 2020 (if any) to adjust deferred taxes?

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