Dixon development began operations in december 2018. when lots for industrial development are sold, dixon recognizes income for financial reporting purposes in the year of the sale. for some lots, dixon recognizes income for tax purposes when collected. income recognized for financial reporting purposes in 2018 for lots sold this way was $10 million, which will be collected over the next three years. scheduled collections for 2019–2021 are as follows: 2019 $ 4 million 2020 4 million 2021 2 million $ 10 million

tax expense = $5.6  million

Deferred tax liability = $4 million

Taxes payable = $1.6 million

Explanation:

Assuming no differences between accounting income and taxable  income, the journal entry to  record income taxes in 2018 is given as:

Pretax accounting income                                                $14 million

Sales revenue from lot sales                                             $10 million

Collections from lot sales                                                   0 million

Taxable income = Pretax accounting income - sales revenue from lot sales + collections from lot sales = $14 million - $10 million = $4 million

Since the tax rate = 40% = 0.4, Therefore:

tax expense = Pretax accounting income × tax rate = $14 million × 0.4 = $5.6  million

Deferred tax liability = Sales revenue from lot sales × tax rate = $10 million × 0.4 = $4 million

Taxes payable = taxable income × tax rate = $4 million × 0.4 = $1.6 million

answer; encouraging the development of innovations by firms attempting to break a monopoly; (creative destruction)