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

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ekkarill92 answered 2 years ago

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