Accounting for Income Taxes

Income tax accounting is the topic candidates fear most — and AICPA exploits that fear. The most common MCQ asks you to compute deferred tax after a rate change: existing DTAs and DTLs must be remeasured using the NEW enacted rate, and the adjustment hits income tax expense in the year of enactment. Don't use the old rate. Also know that a valuation allowance is required if it's more likely than not that some DTA will not be realized.