Windsor Company Has Net Temporary Differences Between Tax and Book

Multiple Choice

Windsor Company has net temporary differences between tax and book accounting of $80 million, resulting in a deferred tax liability of $28 million. An increase in the tax rate would have the following impact on deferred taxes and net income: $$\begin{array} { l c c } & \text { Deferred Taxes } & \text { Net Income } \\\text { A) } & \text { Increase } & \text { No effect } \\\text { B) } & \text { Increase } & \text { Decrease } \\\text { C) } & \text { No effect } & \text { No effect } \\\text { D) } & \text { Decrease } & \text { No effect }\end{array}$$

A) Option A
B) Option B
C) Option C
D) Option D