Shady Lane's income tax payable account decreased from $14 million to $12 million during 2016.If its income tax expense was $80 million,what was shown as an operating cash flow under the direct method?

Question

Quizplus · Accepted Answer

The decrease in income tax payable account indicates a cash outflow of $2 million ($14 million - $12 million). The income tax expense of $80 million is a non-cash expense and should be added back to arrive at operating cash flow. Therefore, the total cash outflow related to income taxes is $82 million ($2 million + $80 million).

Shady Lane's Income Tax Payable Account Decreased from $14 Million