Stadler Corporation’s federal income tax rate is 21 percent. It reports $100,000 depreciation expense on its financial statements and deducts $140,000 depreciation expense on its tax return. How should Stadler account for the difference between its federal tax liability and its book tax expense on its financial statements?
a. $8,400 deferred tax liability
b. $8,400 deferred tax asset
c. $40,000 deferred tax liability
d. $40,000 deferred tax asset