What deferred tax liability would isaac report, Accounting Basics

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What deferred tax liability would isaac report

Isaac Inc. began operations in January 2011. 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 2011, Isaac had $600 million in sales of this type. Scheduled collections for these sales are as follows:

Assume that Isaac has a 30% income tax rate and that there were no other differences in income for financial statement and tax purposes.

Ignoring operating expenses, what deferred tax liability would Isaac report in its year-end 2011 balance sheet?

A. $18 million

B. $162 million

C. $180 million

D. $540 million

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Accounting Basics: What deferred tax liability would isaac report

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