Isaac Inc. began operations in January 2016. For certain of its property sales,

Question

Isaac Inc. began operations in January 2016. For certain of its property sales, Isaac recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Isaac recognizes income when it collects cash from the buyer's installment payments. In 2016, Isaac had $675 million in sales of this type. Scheduled collections for these sales are as follows: 2016 76 million 2017 132 million 2018 132 million 2019 166 million 2020 169 million $675 million Assume that Isaac has a 28% income tax rate and that there were no other differences in income for financial statement and tax purposes. Ignoring operating expenses and additional sales in 2017, what deferred tax liability would lsaac report in its year-end 2017 balance sheet? (Round your answer to the nearest whole million.) O $58 million O $131 million O $152 million O $189 million

Explanation / Answer

Deferred Tax Liability at the end of year 2017 = (675 - (76 + 132)) x 28% = $131 Million

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