A firm’s income tax return shows $50,000 of income taxes 1 answer below »

A firm’s income tax return shows $50,000 of income taxes owed for 2009. For financial reporting, the firm reports deferred tax assets of $42,900 at the beginning of 2009 and $38,700 at the end of 2009. It reports deferred tax liabilities of $28,600 at the beginning of 2009 and $34,200 at the end of 2009.
a. Compute the amount of income tax expense for 2009.
b. Assume for this part that the firm’s deferred tax assets are as stated above for 2009 but that its deferred tax liabilities were $58,600 at the beginning of 2009 and $47,100 at the end of 2009. Compute the amount of income tax expense for 2009.
c. Explain contextually why income tax expense is higher than taxes owed in Part a and lower than taxes owed in Part b.

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