(Answered) Abc co reported a deferred tax liability of 8 million for

Accounting

ABC Co. reported a deferred tax liability of $8 Million for the year ended December 31, 2010, related to a temporary difference of $20 Million. The tax rate is 40%. The temporary difference is expected to reverse in 2012 at which time the deferred tax liability will become payable. There are no other temporary differences in 2010-2012. Assume a new tax law is enacted in 2011 that causes the tax rate to change from 40% to 30% beginning in 2016. (The rate remains 40% for 2015 taxes.) Taxable income in 2011 is $30 million.Determine the effect of the change and prepare the appropriate journal entry to record ABC Co.'s Income tax expense for 2011.

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