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Summary QuestionSuppose that First Buy had an income tax of $20 million for tax reporting purposes
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Suppose that First Buy had an income tax ofQuestionSuppose that First Buy had an income tax of $20 million for tax reporting purposes in FY 2030. Additionally, in FY 2030, the company's other current assets included a deferred tax asset of $5 million, and its other current liabilities included a de...

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  • October 6, 2024
  • 3
  • 2024/2025
  • Summary

Subjects

  • in fy 2030
  • suppose that first buy had an income tax ofquestio
  • the companys other current assets included a def
  • and its other current liabilities included a defe
  • its deferred tax asset and deferred tax

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Question


Suppose that First Buy had an income tax of $20 million for tax reporting

purposes in FY 2030. Additionally, in FY 2030, the company's other current

assets included a deferred tax asset of $5 million, and its other current liabilities

included a deferred tax liability of $3 million. Assume that in FY 2029, its

deferred tax asset and deferred tax liability, respectively, were $1 million and $2

million. What would be the amount of income tax expenses reported on the

company's income statement in-FY 2030?




Answer & Explanation


To determine the income tax expense reported on the company's income

statement for FY 2030, we need to consider both the current tax expense and

any changes in deferred tax assets and liabilities.


1. Current Tax Expense: This is given as $20 million for FY 2030.


2. Deferred Tax Assets and Liabilities:


o Deferred Tax Asset (DTA) at end of FY 2030: $5 million

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