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: $$\begin{array} { | l | c | c | } \hline & \text { Deferred Taxes } & \text { Net Income } \\\hline \text { A) } & \text { Increase } & \text { No effect } \\\hline \text { B) } & \text { Increase } & \text { Decrease } \\\hline \text { C) } & \text { No effect } & \text { No effect } \\\hline \text { D) } & \text { Decrease } & \text { No effect } \\\hline\end{array}$$

A) Choice A
B) Choice B
C) Choice C
D) Choice D