Hopkins Co. at the end of 2012, its first year of operations, prepared a reconciliation between pretax
Question:
Hopkins Co. at the end of 2012, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:
Pretax Financial Income - 900,000
Estimated Litigation Exp - 1,200,000
Extra Depr for Taxes - (1,800.000)
The estimated litigation expense of $1,200,000 will be deductible in 2013 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $600,000 in each of the next three years. The income tax rate is 30% for all years.
The deferred tax liability to be recognized is
Current......................Non Current
A. 180,000 ............360,000
B. 180,000.............270,000
C. 0.........................540,000
D. 0.........................450,000
Expert Answer:
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
