Question

At December 31, 2017, Appaloosa Corporation had a deferred tax liability of \(25,000. At December 31, 2018, the deferred tax liability is \)42,000. The corporation’s 2018 current tax expense is $48,000. What amount should Appaloosa report as total 2018 income tax expense?

Short answer

Current tax expenseis a term used to indicate theamount of tax an organization needs to payfor thecurrent financial year. It isaddedto the amount ofdeferred tax expenseto determine thetotal income tax expenseof the firm.

Step-by-step solution

Given the amounts as

Particulars	Amount
Deferred tax liability in 2017	$25,000
Deferred tax liability in 2018	$42,000
Current tax expense	$48,000

Computation of income tax expense for 2018.

Particulars	Amount
Deferred tax liability as on Dec 31, 2018	$42,000
Less: Deferred tax liability as on Dec 31, 2017	$25,000
Deferred tax expense	$17,000
Add: Current tax expense	$48,000
Income tax expense for 2018	$65,000