Business, 07.04.2020 03:09 makinzy03

Pharoah 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 $960000
Estimated litigation expense 2600000
Installment sales (2080000)
Taxable income $1480000

The estimated litigation expense of $2600000 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 $1040000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1040000 current and $1040000 noncurrent. The income tax rate is 20% for all years. The income tax expense is:

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Pharoah Co. at the end of 2020, its first year of operations, prepared a reconciliation between pret...

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