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In 2020, HD had reported a deferred tax asset of $250 million with no valuation allowance. At December 31, 2021, the account balances of HD Services showed a deferred tax asset of $320 million before assessing the need for a valuation allowance and income taxes payable of $120 million. HD determined that it was more likely than not that 30% of the deferred tax asset ultimately would not be realized. HD made no estimated tax payments during 2021. What amount should HD report as income tax expense in its 2021 income statement

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tanseershar

Answer:

The answer given below;

Explanation:

                                                     Amount in Million $

Income tax payable-Unadjusted                     $120

Reversal of deferred tax asset $320*30%= $96

Total Income Tax Expense                    $216

As the deferred tax asset reversal will result in deferred tax expense therefore $216 in total will be reported as income tax expense.

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