Question
Mathhias Co. at the end of 2018, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax
Mathhias 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 $ 600,000 Estimated litigation expense 1,500,000 Taxable income 2,100,000 The estimated litigation expense of $1,500,000 will be deductible in 2020 when it is expected to be paid. The estimated liability for litigation is classified as noncurrent. The income tax rate is 30% for all years.
6. The income tax expense is
a. $180,000. b. $270,000. c. $300,000. d. $600,000.
7. The deferred tax asset to be recognized is
a. $0. b. $90,000 current. c. $450,000 current. d. $450,000 noncurrent
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