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tangare [24]
4 years ago
12

Plutonic Inc. had $400 million in taxable income for the current year. Plutonic also had a decrease in deferred tax assets of $5

0 million and recognized tax expense of $80 million. The company is subject to a tax rate of 40%.
The change in deferred tax asset was a/an:A. Increase of $30 millionB. Increase of $130 millionC. Decrease of $30 millionD. Decrease of $130 million
Business
1 answer:
andrew-mc [135]4 years ago
6 0

Answer:

Deferred tax is increased by $130 million

Explanation:

We have given income = $400 million

Company is subject to a tax rate of 40 %

So tax rate = 40 %

So current Tax = $400×40%= $160 Million

Decrease in deferred tax assets of 50 million result in increase in tax expense

Hence total Tax Expense= $160+$50= $210 Million

But it is given that expense is only $80 million

So change in deferred tax is increases by = $210 - $80 = $130

So deferred tax is increases by $130 million

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