During a year,Awesome Company reported income tax expense of $300,000.The amount of taxes currently payable remained unchanged from the beginning to the end of the year.The deferred tax liability classified as noncurrent that resulted from the use of MACRS for tax purposes and straight-line depreciation for financial reporting purposes,increased from $40,000 at the beginning of the year to $44,000 at the end of the year.How much cash was paid for income taxes during for the year?

Question

Quizplus · Accepted Answer

The increase in deferred tax liability is $4,000 ($44,000 - $40,000). Since the income tax expense is $300,000 and the deferred tax liability increased by $4,000, the cash paid for income taxes is $296,000 ($300,000 - $4,000).

During a Year,Awesome Company Reported Income Tax Expense of $300,000