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22 January, 02:46

Wayne Co. had a decrease in deferred tax liability of $29 million, a decrease in deferred tax assets of $19 million, and an increase in tax payable of $109 million. The company is subject to a tax rate of 25%. The total income tax expense for the year was:

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  1. 22 January, 03:27
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    The multiple choices are:

    A. $99 million.

    B. $100 million.

    C. $110 million.

    D. $130 million.

    The current option is A, $99 million

    Explanation:

    The total income tax expense for the comprises of the increase in tax payable amount of $109 million plus the decrease in deferred tax assets minus the decrease in deferred tax liability

    Increase in tax payable $109,000,000

    decrease in deferred tax liability ($29,000,000)

    decrease in deferred tax assets $19,000,000

    total income tax expense $99,000,000

    The amount tax expense to deducted in the income statement for the year is $99 million.

    The decrease in deferred tax liability is like an income, hence deducted, while the decrease in deferred tax assets is added as an additional tax expense.
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