PM Question 1 Mathis Co. at the end of 2020, its first year of operations, prepared a reconciliation between protax financial income and taxable income as follows: Pretax financial income $ 1,200,000 Estimated litigation expense Installment sales 3,000,000 (2.400.000) $ 1.800.000 Taxable income The estimated litigation expense of $3,000,000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1,200,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the Installment accounts receivable are classified as $1,200,000 current and $1,200,000 noncurrent. The income tax rate is 20% for all years. The deferred tax asset to be recognized in 8600,000 current $600,000 noncurrent $120,000 current $0