25-27. Mathis Co. at the end of 2014, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 800,000 Estimated litigation expense 2,000,000 Installment sales (1,600,000) Taxable income $ 1,200,000 The estimated litigation expense of $2,000,000 will be deductible in 2016 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $800,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $800,000 current and $800,000 noncurrent. The income tax rate is 30% for all years. 25. The income tax expense is a. $240,000. b. $360,000. c. $400,000. d. $800,000. 26. The deferred tax asset to be recognized is a. $0. b. $120,000 current. c. $600,000 current. d. $600,000 noncurrent. 27. The deferred tax liabilitycurrent to be recognized is a. $120,000. b. $360,000. c. $240,000. d. $480,000.