A Company's Income Statement Reported Net Income of $40,000 During

Multiple Choice

A company's income statement reported net income of $40,000 during 2016. The income tax return excluded a revenue item of $3,000 (reported on the income statement) because under the tax laws the $3,000 would not be reported for tax purposes until 2017. Which of the following statements is correct assuming a 35% tax rate?

A) A $3,000 deferred tax liability is reported as of December 31, 2016.
B) A $3,000 deferred tax asset is reported as of December 31, 2016.
C) A $1,050 deferred tax liability is reported as of December 31, 2016.
D) A $1,050 deferred tax asset is reported as of December 31, 2016.