Alamo Inc. had $370 million in taxable income for the current year. Alamo also h

Question

Alamo Inc. had $370 million in taxable income for the current year. Alamo also had a decrease in deferred tax assets of $21 million and an increase in deferred tax liabilities of $57 million. The company is subject to a tax rate of 40%. The total income tax expense for the year was:

  

Alamo Inc. had $370 million in taxable income for the current year. Alamo also had a decrease in deferred tax assets of $21 million and an increase in deferred tax liabilities of $57 million. The company is subject to a tax rate of 40%. The total income tax expense for the year was:

Explanation / Answer

Thus, the correct choice is a. $226 mils

Total income tax expense x Decrease in deferred tax assets 21 mils Increase in deferred tax liabilities 57 mils Income tax payable @40% on 370 mils 148 mils Total income tax expense = 148+57+21 = 226 mils

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