From the course: Financial Accounting Foundations

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Deferring taxes

Deferring taxes

From the course: Financial Accounting Foundations

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Deferring taxes

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- Corporations pay income taxes just like individuals do. It's reported as the final expense in the income statement. For example, in 2018, the final three lines in Exxon Mobil's income statement appeared like this, with all numbers shown in millions. The $9.532 billion in income tax expense reported by Exxon Mobil in 2018 is not necessarily equal to the amount of cash paid for income taxes during the year. In fact, Exxon Mobil paid cash of $9.294 billion for income taxes in 2018. The difference between reported income tax expense and the actual amount of cash paid for taxes arises for two reasons. First, as with many other expenses, income taxes are not necessarily paid in cash in the year in which they are incurred. Because less cash than this was paid, there was an increase in the income taxes payable liability that remained at the end of 2018. Now in a similar fashion, individuals usually pay more or less income tax…

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