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Wildhorse Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax

Wildhorse Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income $1470000
Estimated litigation expense 3450000
Installment sales (2760000)
Taxable income $2160000

The estimated litigation expense of $3450000 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 $1380000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1380000 current and $1380000 noncurrent. The income tax rate is 20% for all years. The deferred tax asset to be recognized is

$138000 noncurrent.

$0.

$690000 noncurrent.

$138000 current.

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