Find how a deferred income tax liability of

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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

Reference no: EM132764562

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