Shane Company Uses an Accelerated Depreciation Method for Income Tax

Shane Company uses an accelerated depreciation method for income tax purposes and the straight-line depreciation method for financial reporting purposes. As of December 31, 2016, Shane has a deferred tax liability balance related to depreciation temporary differences of $80,000. In 2017, depreciation for income tax purposes was $360,000, while depreciation for financial reporting purposes was $300,000. If the income tax rate is 30%, no other temporary or permanent differences exist, and taxable income is $400,000,which of the following would be included in the entry to record income tax expense on December 31, 2017?

A) Debit to Income Tax Expense for $138,000
B) Credit to Income Taxes Payable for $138,000
C) Debit to Deferred Tax Asset for $120,000
D) Credit to Deferred Tax Liability for $120,000