Pear, Inc Owns 80% of Apple Corporation

Multiple Choice

Pear, Inc. owns 80% of Apple Corporation. During the current year, Apple reported operating income before tax of $400,000 and paid a dividend of $120,000. The income tax rate for each company is 40% and separate tax returns are prepared. What deferred income tax liability arising this year must be recognized in the consolidated balance sheet?

A) $0.
B) $7,680.
C) $17,920.
D) $38,400.
E) $51,200.