Delta had a deferred tax asset of $200 million with no valuation allowance on December 31,...

Delta had a deferred tax asset of $200 million with no valuation allowance on December 31, 2020. At the end of 2021, Delta had a deferred tax asset of $230 million before assessing the need for a valuation allowance. For the year 2021, Delta's income taxes payable is $85 million. At the end of 2021, Delta determined that it was more likely than not that 20% of its deferred tax assets will not be realized. What amount should Delta report as income tax expense in its 2021 income statements

101 million.
148 millon.
115 million.
84 million.

Expert Solution

Answer

Explanation :

We can also find that Reduction in deferred tax asset in 2020 = deferred tax asset balance - realizable deferred tax asset

= $200 million - ($230 million* 80%)

= $200 million - $184 million

= $16 million

Now computing the above values :

Total income tax expense in 2021= $85 million + $16 million

= $101 million

Therefore, Income tax expenses in 2021 $101 million

Please Like

ekkarill92 answered 2 years ago

At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account...

At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account and a $170 million balance in its deferred tax liability account. The balances were due to the following cumulative temporary differences: Estimated warranty expense, $25 million: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty). Depreciation expense, $250 million: straight-line in the income statement; MACRS on the tax return. Income from installment sales of properties, $175 million: income recorded in...

At December 31, DePaul Corporation had a $9 million balance inits deferred tax asset account...

At December 31, DePaul Corporation had a $9 million balance in its deferred tax asset account and a $63 million balance in its deferred tax liability account. The balances were due to the following cumulative temporary differences: Estimated warranty expense, $10 million: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty). Depreciation expense, $160 million: straight-line in the income statement; MACRS on the tax return. Income from installment sales of properties, $50 million: income recorded in...

Exercise 16-13 (Algo) Deferred tax asset; income tax payable given; previous balance in valuation allowance [LO16-4]...

Exercise 16-13 (Algo) Deferred tax asset; income tax payable given; previous balance in valuation allowance [LO16-4] At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $105 million attributable to a temporary book-tax difference of $420 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $320 million. Payne has no other temporary differences. Taxable income for 2021 is $756 million and the tax rate is 25%....

Shwonson Industries reported a deferred tax asset of $5 millionfor the year ended December 31,...

Shwonson Industries reported a deferred tax asset of $5 million for the year ended December 31, 2020, related to a temporary difference of $20 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax asset will reduce taxable income. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 15% beginning in...

Bronson Industries reported a deferred tax liability of $9.0 million for the year ended December 31,...

Bronson Industries reported a deferred tax liability of $9.0 million for the year ended December 31, 2020, related to a temporary difference of $36 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax liability will become payable. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 20% beginning in 2022....

KLH Company reported the following in the footnotes for its deferred tax assets (DTA): Valuation allowance...

KLH Company reported the following in the footnotes for its deferred tax assets (DTA): Valuation allowance for DTA at the beginning of the year $2,700 Valuation allowance for DTA at the end of the year $3,900 Based on this information, the firm most likely expects future earnings to: A) increase B) decrease C) remain relatively stable

Discuss the situations that will result in a deferred tax liability and a deferred tax asset....

Discuss the situations that will result in a deferred tax liability and a deferred tax asset. Provide an example of each. Prepare a journal entry for your examples. Discuss how deferred liabilities affect the income statement.

At the end of 2015, Payne Industries had a deferred tax asset account with a balance...

At the end of 2015, Payne Industries had a deferred tax asset account with a balance of $8 million attributable to a temporary book-tax difference of $40 million in a liability for estimated expenses. At the end of 2016, the temporary difference is $20 million. Payne has no other temporary differences. Taxable income for 2016 is $80 million and the tax rate is 20% Payne has a valuation allowance of $1 million for the deferred tax asset at the beginning...

At the end of 2017, Payne Industries had a deferred tax asset account with a balance...

At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book–tax difference of $75 million in a liability for estimated expenses. At the end of 2018, the temporary difference is $60 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2018 is $235 million and the tax rate is 40%. Required: 1. Prepare the journal entry(s) to...

At the end of 2017, Payne Industries had a deferred tax asset account with a balance...

At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $22 million attributable to a temporary book–tax difference of $55 million in a liability for estimated expenses. At the end of 2018, the temporary difference is $50 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2018 is $215 million and the tax rate is 40%. Required: 1. Prepare the journal entry(s) to...

Question

Delta had a deferred tax asset of $200 million with no valuation allowance on December 31,...

Solutions

Expert Solution

Related Solutions

At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account...

At December 31, DePaul Corporation had a $9 million balance inits deferred tax asset account...

Exercise 16-13 (Algo) Deferred tax asset; income tax payable given; previous balance in valuation allowance [LO16-4]...

Shwonson Industries reported a deferred tax asset of $5 millionfor the year ended December 31,...

Bronson Industries reported a deferred tax liability of $9.0 million for the year ended December 31,...

KLH Company reported the following in the footnotes for its deferred tax assets (DTA): Valuation allowance...

Discuss the situations that will result in a deferred tax liability and a deferred tax asset....

At the end of 2015, Payne Industries had a deferred tax asset account with a balance...

At the end of 2017, Payne Industries had a deferred tax asset account with a balance...

At the end of 2017, Payne Industries had a deferred tax asset account with a balance...