Mill Company began operations on January 1, 20X1, and recognized income from construction-type contracts under different methods for tax purposes and financial reporting purposes. Information concerning income recognition under each method is as follows:
Year Tax Purposes Book Purposes
20X1 $400,000 $0
20X2 625,000 375,000
20X3 750,000 850,000
Assume the income tax rate is 21% in all years and that Mill has no other temporary differences. In its December 31, 20X3, balance sheet,
what amount of deferred income taxes should Mill report?
Indicate whether the amount is an asset or a liability.