Problem

Pike, Inc., owns 60 percent of Stark Company. During the current year, Stark reported net...

Pike, Inc., owns 60 percent of Stark Company. During the current year, Stark reported net income of $200,000 but paid a total cash dividend of only $40,000. What deferred income tax liability must be recognized in the consolidated balance sheet? Assume the tax rate is 30 percent.

a. $5,760.

b. $9,600.

c. $12,840.

d. $28,800.

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Solutions For Problems in Chapter 7