Reference no: EM132767402

Mill, which began operations on January 1, Year 9, recognizes income from long-term construction contracts over time in its financial statements and at the end of the contract for income tax reporting. Income under each method follows:

Year               At end of contract          Over time.
year 9             $0                            $300,000
year 10.          $400,000                    $600,000
year 11.           $700,000                     $850,000

Problem 1: The income tax rate was 30% for Year 9 through Year 11. For years after Year 11, the enacted tax rate is 25%. There are no other temporary differences. Mill should report in its December 31, Year 11, balance sheet, a deferred income tax liability of

A. $87,500

B. $105,000

C. $162,500

D. $195,000