Final answer:
The deferred tax expense is calculated as the increase in deferred tax liability minus the increase in deferred tax asset, corresponding to the net increase in future expected tax payments.
Step-by-step explanation:
The deferred tax expense pertains to the difference in taxes due to temporary differences between the financial reporting of revenue and expenses and the tax reporting of them, based on tax laws and regulations. The correct answer to the question regarding the calculation of deferred tax expense is b. increase in balance of deferred tax liability minus the increase in balance of deferred tax asset. When a company's deferred tax liability increases, it anticipates more taxes in the future, whereas an increase in a deferred tax asset suggests that the company will save on taxes in the future. Therefore, the deferred tax expense is the net increase in the taxes expected to be paid.