FARE p.76 #9 & #8
In my opinion, the amount of DTL for years 1 through 2 in Mill's balance sheet was $90,000 and $150,000 respectively. I mean the income tax rate, 30%, not 25% was applied to calculate the DTL for those two years because the enacted tax rate was 30% when you generated those years' balance sheet. If we use 25% tax rate for year 3 DTL calculation since the difference is future taxable, do we have to retrospectively correct DTL of year 1 and year 2 by applying 25% tax rate?
For me, question #8 on the same page is so awkward. For example, when you generate year 1 balance sheet, how can you know future four-year tax rates and future four years' financial information? We just use past and current years' data to calculate DTL for a current year balance sheet except when we know a different tax rate has been passed into law for next year?