Rocket reported a deferred tax asset of $200 million at the end of 2021 before assessing if a valuation allowance was needed, and income taxes payable was $96 million. Rocket determined 30% of the deferred tax asset would likely not be realized. Rocket had no deferred tax liability in 2020 or 2021 and made no estimated tax payments in 2021. The amount Rocket should report as income tax expense on its 2021 income statement is $58 million.

1. In 2020, Rocket Inc. had reported a deferred tax asset of $154 million with no valuation
allowance. At December 31, 2021, the account balances of Rocket showed a deferred
tax asset of $200 million before assessing the need for a valuation allowance and
income taxes payable of $96 million. Rocket determined that it was more likely than not
that 30% of the deferred tax asset ultimately would not be realized. Rocket does not
have any deferred tax liability at the beginning or ending of the year 2021. Rocket made
no estimated tax payments during 2021. What amount should Rocket report as income
tax expense in its 2021 income statement? (Round your calculations to the nearest
whole million.)
Multiple Choice
$96 million
$58 million
$110 million
$148 million
In 2020, Rocket Inc. had reported a deferred tax asset of $154 million with no valuation
allowance. At December 31, 2021, the account balances of Rocket showed a deferred tax asset of
$200 million before assessing the need for a valuation allowance and income taxes payable of
$96 million. Rocket determined that it was more likely than not that 30% of the deferred tax
asset ultimately would not be realized. Rocket does not have any deferred tax liability at the
beginning or ending of the year 2021. Rocket made no estimated tax payments during 2021.
What amount should Rocket report as income tax expense in its 2021 income statement? (Round
your calculations to the nearest whole million.)
Multiple Choice
$96 million
$58 million
$110 million
$148 million