Fesmire Co

Fesmire Co. had a deferred tax liability balance due to a temporary difference at the beginning of 2007 related to $200,000 of excess depreciation. In December of 2007, a new income tax act is signed into law that raises the corporate rate from 35% to 40%, effective January 1, 2009. If taxable amounts related to the temporary difference are scheduled to be reversed by $100,000 for both 2008 and 2009, Fesmire should increase or decrease deferred tax liability by what amount?

A) Decrease by $10,000
B) Decrease by $5,000
C) Increase by $5,000
D) Increase by $10,000