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Rico Corp. owns 40% of Dee Corp.'s voting common stock and accounts for its investment...

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Accounting

Rico Corp. owns 40% of Dee Corp.'s voting common stock and accounts for its investment using the equity method. During Year 2, Dee reported earnings of $225,000 and paid dividends of $75,000. Rico assumes that all of Dee's undistributed earnings will be distributed as dividends in future years. Rico's income tax rate is 30%. Ignoring the dividends received deduction, what amount of deferred income tax liability should Rico report in its Year 2 financial statements? A. $0 B. $9,000 C. $18,000 D. $27,000

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