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By how much did Jenks Inc tax liability decrease

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Reference no: EM132993377

Question - Recording the Impact of TCJA - Assume that at the end of 2017, Jenks Inc's, only temporary difference is a $2,000,000 taxable temporary difference that arose in the prior year and is expected to reverse in 2018 and 2019. The deferred tax liability at the beginning of 2017 is $700,000, reflecting the 35% corporate tax rate in effect at that date. On December 22, 2017, legislation was enacted by Congress and signed by the President that reduced the tax rate to 21%, effective January 1, 2018.

Required -

a. What is Jenks Inc's deferred tax liability in December 2017?

b. By how much did Jenks Inc's tax liability decrease?

c. How is the adjustment in Jenks Inc's tax liability recorded?

Reference no: EM132993377

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