The Wolf Group Recorded a Deferred Tax Asset of $60,000

The Wolf Group recorded a deferred tax asset of $60,000 due to a book-tax difference in warranty liabilities. Management has assessed that it is more likely than not that the firm will not realize 30% of the deferred tax asset. After recording the valuation allowance, Wolf's net income will ________ and assets will ________.

A) increase by $18,000; decrease by $60,000
B) increase by $18,000; increase by $18,000
C) decrease by $60,000; increase by $18,000
D) decrease by $18,000; decrease by $18,000