Use the following information for questions 55 through 57.
Mathis Co. at the end of 2014, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: The estimated litigation expense of $2,000,000 will be deductible in 2016 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $800,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $800,000 current and $800,000 noncurrent. The income tax rate is 30% for all years.
-The deferred tax liability-current to be recognized is

Question

Use the following information for questions 55 through 57.
Mathis Co. at the end of 2014, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:  The estimated litigation expense of $2,000,000 will be deductible in 2016 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $800,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $800,000 current and $800,000 noncurrent. The income tax rate is 30% for all years.
-The deferred tax liability-current to be recognized is

Quizplus · Accepted Answer

A deferred tax liability-current is recognized when there are temporary differences between the book basis and tax basis of assets and liabilities that will result in taxable amounts in the future. The correct amount, $240,000, is determined based on the information provided in the question, assuming it aligns with standard accounting principles for calculating such liabilities.

Use the Following Information for Questions 55 Through 57