A firm acquires an asset for $120,000 with a 4-year useful life and no salvage value. The asset will generate $50,000 of cash flow for all four years. The tax rate is 40% each year. The firm will depreciate the asset over three years on a straight-line (SL) basis for tax purposes and over four years on a SL basis for financial reporting purposes. At the end of year 2, the firm's balance sheet will report a deferred tax: the answer: liability of $8,000