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When a change in the tax rate is enacted, the effect on existing future income tax assets or liabilities is

When a change in the tax rate is enacted, the effect on existing future income tax assets or liabilities is

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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When a change in the tax rate is enacted, the effect on existing future income tax assets or liabilities is O not recognized until the benefit or cost of the rate change is realized when the timing differences actually reverse. O recorded immediately as a retroactive adjustment to retained earnings. O recorded prospectively over the number of years from the year of the change until the period in which the timing differences are expected to reverse. O recorded as an adjustment to income tax expense in the period of the rate change.
Transcribed Image Text:When a change in the tax rate is enacted, the effect on existing future income tax assets or liabilities is O not recognized until the benefit or cost of the rate change is realized when the timing differences actually reverse. O recorded immediately as a retroactive adjustment to retained earnings. O recorded prospectively over the number of years from the year of the change until the period in which the timing differences are expected to reverse. O recorded as an adjustment to income tax expense in the period of the rate change.
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