Sunland 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 $1380000 Estimated litigation expense 3300000 Installment sales (2640000) Taxable income $2040000 The estimated litigation expense of $3300000 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 $1320000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1320000 current an $1320000 noncurrent. The income tax rate is 20% for all years. The income tax expense is O $1320000. O $276000. O $660000. O $408000.

Sunland 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 $1380000 Estimated litigation expense 3300000 Installment sales (2640000) Taxable income $2040000 The estimated litigation expense of $3300000 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 $1320000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1320000 current an $1320000 noncurrent. The income tax rate is 20% for all years. The income tax expense is O $1320000. O $276000. O $660000. O $408000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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