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I JUST WANT THE ANSWER FOR QUESTION 4. Mathis Co. at the end of 2012, its first year of operations, prepared a reconciliation between pretax...
I JUST WANT THE ANSWER FOR QUESTION 4.Mathis Co. at the end of 2012, its first year of operations, prepared a reconciliation betweenpretax financial income and taxable income as follows:Pretax financial income $ 600,000Estimated litigation expense 1,500,000Installment sales (1,200,000)Taxable income $ 900,000The estimated litigation expense of $1,500,000 will be deductible in 2014 when it is expected tobe paid. The gross profit from the installment sales will be realized in the amount of $600,000 ineach of the next two years. The estimated liability for litigation is classified as noncurrent and theinstallment accounts receivable are classified as $600,000 current and $600,000 noncurrent. Theincome tax rate is 30% for all years.1)The income tax expense is a. $180,000.b. $270,000.c. $300,000.d. $600,000.2)The deferred tax asset to be recognized isa. $0.b. $90,000 current.c. $450,000 current.d. $450,000 noncurrent3)The deferred tax liability—current to be recognized isa. $90,000.b. $270,000.c. $180,000.d. $360,000.4)If the enacted tax rates for 2012,2013 and 2014 are 30%,35% and 40% respectively, what is the amount of deferred tax asset to be recognized?a. $0b. $90,000c. 450,000d. 600,000
