From the course: Finance and Accounting Tips

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Deferred taxes

Deferred taxes

From the course: Finance and Accounting Tips

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Deferred taxes

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- Exxon Mobil is a huge oil and gas company. They pump oil out of the ground and through various processes, the end result is the gas goes in our tanks so that we can get from point A to point B. For 2016, Exxon Mobil reported total revenues of over $226 billion. They reported net income of $7.8 billion. And their income tax expense for the year, a negative 406 million. In other words, they did not report income tax expense for 2016. They reported the opposite of that. How can that be? At the same time during 2016, Exxon reported that they paid $4.2 billion in income tax. Well, I'm confused. How can they report negative tax expense when they report almost $8 billion in net income and pay over $4 billion to various governments as income tax? Well, the answer will make perfect sense, hopefully, with a little more information. Now, a primary reason for a difference between reported income tax expense and the actual amount of cash paid for taxes is that income tax expense is based on…

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