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Cullumber Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax
Cullumber Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax finandal income $3660000 Estimated litigation expense 4660000 Extra depreciation for taxes (6648000) Taxable income $ 1672000 The estimated litigation expense of $4660000 will be deductible in 2018 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2216000 in each of the next 3 years. The income tax rate is 40% for all years. The deferred tax asset to be recognized is O $1864000 $886400 O $668800 0 $1464000
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