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.

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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

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ekkarill92 answered 1 year ago

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