Hopkins Co. at the end of 2018, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income $ 750,000

Estimated litigation expense 1,000,000

Extra depreciation for taxes (1,500,000)

Taxable income $ 250,000

The estimated litigation expense of $1,000,000 will be deductible in 2019 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $500,000 in each of the next three years. The income tax rate is 30% for all years.

1. The deferred tax asset to be recognized is

a. $75,000

b. $150,000

c. $225,000

d. $300,000

2. The deferred tax liability to be recognized is

Current Noncurrent

a. $150,000 $300,000

b. $150,000 $225,000

c. $0 $450,000

d. $0 $375,000