Compute the amount of income tax expense

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Problem - Computation of Income Tax Expense - A firm's income tax return shows $50,000 of income taxes owed for 2017. For financial reporting, the firm reports deferred tax assets of $42,900 at the beginning of 2017 and $38,700 at the end of 2017. It reports deferred tax liabilities of $28,600 at the beginning of 2017 and $34,200 at the end of 2017.

Required -

a. Compute the amount of income tax expense for 2017.

b. Assume for this part that the firm's deferred tax assets are as stated above for 2017 but that its deferred tax liabilities were $58,600 at the beginning of 2017 and $47,100 at the end of 2017. Compute the amount of income tax expense for 2017.

c. Explain contextually why income tax expense is higher than taxes owed in Part a and lower than taxes owed in Part b.

Reference no: EM132893003

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