Question

Alamo Inc. had $380 million in taxable income for the current year. Alamo also had a...

Alamo Inc. had $380 million in taxable income for the current year. Alamo also had a decrease in deferred tax assets of $29 million and an increase in deferred tax liabilities of $66 million. The company is subject to a tax rate of 25%. The total income tax expense for the year was:

Multiple Choice

  • $190 million.

  • $218 million.

  • $475 million.

  • $247 million.

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Answer #1

Answer: $190 million

Explanation

Current taxes = $380 million x 25% = $95 million

The total income tax expense for the year was = Current taxes + Decrease in deferred tax assets + Increase in deferred tax liabilities

= $ $95 million + $29 million + $66 million

= $190 million

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