Question
Simmons Corporation had pretax income of $500,000 in 2014. For Simmons Company, the only difference between pretax income and taxable income for 2014 relates to
Simmons Corporation had pretax income of $500,000 in 2014. For Simmons Company, the only difference between pretax income and taxable income for 2014 relates to a temporary difference which originated in 2014. Specifically, Simmons had a revenue from item #1 of $200,000 for financial reporting purposes in 2014; for income tax purposes the $200,000 of revenue from item #1 will be recognized over the years as the cash is collected as follows: $80,000 in 2014, $70,000 in 2015 and $50,000 in 2016.
Simmons Corporation had pretax income of $600,000 in 2015.
All temporary differences reversed as expected. The company complies with generally accepted accounting principles. The company expects pretax book income and taxable income in all years.
The income tax rate is 40%.
Required
On its 12-31-2015 balance sheet, Simmons should report a deferred income tax of?
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