When a change in the tax rate is enacted into law, its effect on existing deferred income tax accounts should be: a. applied to all temporary or permanent differences that arise prior to the date of the enactment of the tax rate change, but not subsequent to the date of the change.
b. reported as an adjustment to tax expense in the period of change.
c. handled retroactively in accordance with the guidance related to changes in accounting principles.
d. considered, but it should only be recorded in the accounts if it reduces a deferred tax liability or increases a deferred tax

Engberg company installs lawn sod in home yards. the company’s most recent monthly contribution format income statement follows: amount percent of sales sales $ 80,000 100% variable expenses 32,000 40% contribution margin 48,000 60% fixed expenses 38,000 net operating income $ 10,000 required: 1. compute the company’s degree of operating leverage. (round your answer to 1 decimal place.) 2. using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales. (do not round intermediate calculations.) 3. construct a new contribution format income statement for the company assuming a 5% increase in sales.