Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 4. sheridan co. at the end of 2020, its first year

4. Sheridan Co. at the end of 2020, its first year of operations, prepared a...

60.1K

Verified Solution

Question

Accounting

4. Sheridan 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 $ 990000
Estimated litigation expense 2650000
Installment sales ( 2120000)
Taxable income $ 1520000

The estimated litigation expense of $ 2650000 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 $ 1060000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $ 1060000 current and $ 1060000 noncurrent. The income tax rate is 20% for all years. The deferred tax liability to be recognized is

A) $ 304000.

B) $ 212000.

C) $ 106000.

D) $ 424000.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students