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Question:
A company reports income tax expense of $25,000. During the year it reports a decrease in deferred tax liabilities of $12,500 and an increase in deferred tax assets of $5,000. The company’s taxes payable for the year are closest to:
A
$42,500.
explanation
ITE = TP + Change in DTL − Change in DTA
TP = $25,000 − (–$12,500) + $5,000 = $42,500
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