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Cross Company reported the following results for the year ended December 31, Year 13, its first...

Cross Company reported the following results for the year ended December 31, Year 13, its first year of operations:

Income (per books before income taxes) $750,000
Taxable Income 1,200,000

The difference between book income and taxable income is due to a temporary difference which will reverse in Year 14. What should Cross record as a net deferred tax asset or liability for the year ended December 31, Year 13, assuming that the enacted tax rates in effect are 35% for Year 13 and 40% for Year 14?

A.

$157,500 deferred tax liability.
B.

$157,500 deferred tax asset.
C.

$180,000 deferred tax liability.
D.

$180,000 deferred tax asset.

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