In Its First Year of Operations, Badonna Corp

question 18

Essay

In its first year of operations, Badonna Corp. reported Income Tax Expense of $50,000 and Income Tax Payable of $16,000. At the end of the year, Badonna reported a noncurrent Deferred Tax Liability of $5,000. What is the amount of cash paid for income taxes during the year?

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Definitions:

Cash Inflows

The total amount of money being transferred into a company, typically from operations, financing, or investing activities.

Net Cash Inflows

The total amount of cash received by a company during a specific period, minus the total amount of cash outflows.

Payback Period

The length of time required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the time value of money and risk.