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Blossom Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax
Blossom Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income Estimated Ritigation expense Installment sales Taxable income $1050000 3400000 (2400000) $2050000 The estimated Itigation expense of $3400000 will be deductible in 2019 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1200000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1200000 current and $1200000 noncurrent. The income tax rate is 40% for all years. The deferred tax ability to be recognized is O $480000 O $2320000 $820000 5960000
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