question archive In 2017, Kerry Corp’s financial statement showed accrued losses on disposal of unused plant facilities of $3,600,000
In 2017, Kerry Corp’s financial statement showed accrued losses on disposal of unused plant facilities of $3,600,000
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In 2017, Kerry Corp’s financial statement showed accrued losses on disposal of unused plant facilities of $3,600,000. The facilities were sold in December 2018 and a $3,600,000 loss was recognized for tax purposes then. Also in 2018, Kerry Corp’s paid $150,000 for a two-year life insurance policy for their CEO Kerry, and the company was the beneficiary. Assuming that the enacted tax rate is 35% in both 2017 and 2018, and that Kerry paid $1,170,000 in income taxes in 2017.
Trump enacted the tax cut and job act in 2018 and effectively changed the corporate tax rate to 21%. For Kerry’s quarterly financial statement on March 2018, how would this change in tax rate impact Kerry’s net deferred income taxes? Show me your calculation. Is this change counter-intuitive for you? Why and why not?
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