Frizell Co. at the end of 2007, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:
The estimated litigation expense of $1,000,000 will be deductible in 2008 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $500,000 in each of the next three years. The income tax rate is 30% for all years.
-The deferred tax liability to be recognized is $\begin{array}{cc}
& \text{Current} & &\text{Noncurrent }\\end{array}$

Question

Frizell Co. at the end of 2007, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:
  The estimated litigation expense of $1,000,000 will be deductible in 2008 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $500,000 in each of the next three years. The income tax rate is 30% for all years.
-The deferred tax liability to be recognized is $\begin{array}{cc}
& \text{Current} & &\text{Noncurrent }\\end{array}$

Quizplus · Accepted Answer

($1,500,000 × 30%) = $450,000.

Frizell Co CurrentNoncurrent \begin{array}{cc}& \text{Current} & &\text{Noncurrent }\\\end{array}​Current​​Noncurrent ​ A) $150,000$300,000\begin{array}{cc} & \$ 150,000 & \$ 300,000 \\\end{array}​$150,000​$300,000​

Frizell Co $\begin{array}{cc}& \text{Current} & &\text{Noncurrent }\\\end{array}$ A) $\begin{array}{cc} & \$ 150,000 & \$ 300,000 \\\end{array}$