The 2013 annual report of dow chemical disclosed the following: deferred tax assets decreased by $1,503 million and deferred tax liabilities increased by $38 million. how do these balance-sheet changes affect tax expense on the income statement for the year? a) increase tax expense by $1,331 millionb) decrease tax expense by $1,331 millionc) increase tax expense by $1,541 milliond) decrease tax expense by $1,541 millione) none of the above

The correct option is (c) Increase tax expense by $1,541 million

Explanation:

Step 1. Given information.

Step 2. Formulas needed to solve the exercise.

Increase in Tax Expense= Decrease in Deferred Tax Asset + Increase in Deferred Tax Liabilities  

Step 3. Calculation.

Increase in Tax Expense = 1503+38 =  1541 Million  

Step 4. Solution.

The correct option is (c) Increase tax expense by $1,541 million

b. a single paragraph.

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