Southlawn Inc.'s taxable income is computed as follows:Book income before tax?$ 2,405,600??Net permanent differences?(512,000)?Net temporary differences? (189,000)?Taxable income?$ 1,704,600??Southlawn's tax rate is 21%. Which of the following statements is true?
A. The permanent differences caused a $107,520 net increase in Southlawn's deferred tax liabilities.
B. The temporary differences caused a $39,690 net increase in Southlawn's deferred tax liabilities.
C. The temporary differences caused a $39,690 net decrease in Southlawn's deferred tax liabilities.
D. The permanent differences caused a $107,520 net decrease in Southlawn's deferred tax liabilities.
Answer: B
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