A company reported $350,000. in income before income tax for financial reporting
purposes in Year 3, its first year of operation. The tax depreciation exceeded its book depreciation by $30,000. the tax rate for Year 3 and all future years is 40%. What amount of deferred income tax should this company report in its December 31, Year 3, balance sheet?

A. $8,000 deferred tax asset

B. $9,000 deferred tax liability

C. $10,000 deferred tax asset

D. $12,000 deferred tax liability

My answer is D. $12,000 deferred tax liability

$30,000 x 40%= $12,000

Is this correct?