Mill Company began operations on January 1, 2008 and recognized income from constructiontype contracts under the percentage-of-completion method for tax purposes and the completed-contract method for financial reporting purposes. Information concerning income recognition under each method is as follows:

Required:
For all years, assume that the income tax rate is 40% and that Mill has no other timing differences.
In its December 31, 2010 balance sheet, Mill should report deferred income taxes of how much? Indicate whether the amount is an asset or a liability.

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Year 2008 2009 2010 Percentage of Completion (Tax Purposes) $400,000 625,000 750,000 Completed Contract (Book Purposes) -0- $ 375,000 850,000