Longboat, Inc. sold a luxury passenger boat from its inventory on December 31 for $2,000,000. It is estimated that Longboat will incur $100,000 in warranty expenses during its 5-year warranty period. Longboat's tax rate is 30%. To account for the tax implications of the warranty obligation prior to incurring warranty expenses, Longboat should:

A.Record a deferred tax asset of $30,000.

B.Record a deferred tax liability of $30,000.

C.Make no entry until actual warranty expenses are incurred.