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Question
During its first year of operations a company recorded revenues totaling $6,000,000 for book purposes. For tax purposes, $2,400,000 of the revenue is taxable during the first year of operations and $3,600,000 is taxable during the second year of operations. The income tax rate for both years is 40%. The balance sheet at the end of the first year of operations will report a deferred tax liability of
A. $2,400,000
B. $1,440,000
C. $960,000
D. $480,000
Answer
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