Use the Following Information for Questions 55 Through 57

question 56

Multiple Choice

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 asset to be recognized is

• A) $0.
• B) $120,000 current.
• C) $600,000 current.
• D) $600,000 noncurrent.

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Definitions:

Refrigerated Van

A refrigerated van is a vehicle designed with insulation and a cooling system to transport perishable goods at controlled temperatures.

Cryogenic Reefers Units

These are refrigeration units used for transporting perishable goods at extremely low temperatures, often utilizing liquid nitrogen or carbon dioxide as cooling agents.

ODP Rating

Ozone Depletion Potential rating; a measure of how much a chemical substance can break down ozone in the atmosphere.

Crossmember Spread

The distance between crossmembers, which are structural components that provide support and rigidity to a vehicle's chassis.