Use the Following Information for Questions 70 Through 72

question 72

Multiple Choice

Use the following information for questions 70 through 72.
Lyons Company deducts insurance expense of $126,000 for tax purposes in 2014, but the expense is not yet recognized for accounting purposes. In 2015, 2016, and 2017, no insurance expense will be deducted for tax purposes, but $42,000 of insurance expense will be reported for accounting purposes in each of these years. Lyons Company has a tax rate of 40% and income taxes payable of $108,000 at the end of 2014. There were no deferred taxes at the beginning of 2014.
-What is the amount of the deferred tax liability at the end of 2014?

• A) $50,400
• B) $43,200
• C) $18,000
• D) $0

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Definitions:

Initiation

The act of beginning something, such as a process or activity.

Tough Initiation

Practices or rituals designed to introduce and integrate new members into an existing community or organization, often involving challenging tasks or hardships.

Small Size

Referring to entities, organizations, or objects that possess relatively limited dimensions or scale.

Cohesive Groups

Social units where members share strong bonds, leading to high levels of cooperation and mutual support.