Question

Cliff Corp (CC) reported on its financial statements deferred taxes of $250, $300 and $220 in 2017, 2018 and 2019, respectively. If CC reported income tax expense of $100 for in 2018 and 2019, then income tax did CC actually pay in 2018 and 2019?

Answer 1

Calculation of the Income tax paid :-

Cash paid to income tax = Opening deferred taxes balance + income tax expense - closing deferred taxes balance

Cash paid to income tax for 2018 = Opening deferred taxes balance 2018 + income tax expense - closing deferred taxes balance 2018 = $ 250 + 100 - 300

Cash paid to  income tax for 2018 = $ 50

Cash paid to  inxcome tax 2019 = Opening deferred taxes balance 2019 + income tax expense - closing deferred taxes balance 2019 = $ 300 + 100 - 220 = $ 180

Cash paid to income tax for 2019 = $ 180