Question

Alamo Inc. had $240 million in taxable income for the current year. Alamo also had a decrease in deferred tax assets of $26 million and an increase in deferred tax liabilities of $52 million. The company is subject to a tax rate of 25%. The total income tax expense for the year was:

Answer 1

The total income tax expense was $138,000,000

Step-by-step explanation:

Total income tax expense

Decrease in deferred tax assets $26,000,000

+Increase in deferred tax liabilities $52,000,000

+Income tax payable $60,000,000

Total income tax expense $138,000,000

Workings

Income tax payable = 25% * $240,000,000

Income tax payable = $60,000,000