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11 February, 07:34

Alamo, Inc., had $300 million in taxable income for the current year. Alamo also had a decrease indeferred tax assets of $30 million and an increase in deferred tax liabilities of $60 million. The company issubject to a tax rate of 40%. The total income tax expense for the year wasA. $150 million. B. $180 million. C. $ 390 million. D. $210 million.

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  1. 11 February, 10:00
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    D. $210 million

    Explanation:

    Data given

    Decrease in deferred tax assets = $30

    Increase in deferred tax liabilities = $60

    Taxable income = $300

    Tax rate = 40%

    The computation of total income tax expense is given below:-

    Income tax Payable = $300 * 40%

    = $120

    Total income tax expenses = Income tax Payable + Decrease in deferred tax assets + Increase in deferred tax liabilities

    = $120 + $30 million + $60 million

    = $210 million

    So, for computing the total income tax expense we simply applied the above formula.
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