B. Cost minimization.
Explanation:
Cost minimization is basically maintaining intended level quality at the lowest cost possible.
deferred income tax liability 7,000 debit
retained earnings 7,000 credit
Explanation:
currently the company has a tax liability as it will pay more taxes when the depreciation for tax purposes ended lower than their accounting depreciation.
We must adjust for 20X3 as will be taxed at 30% instead of 40%
the difference will be for 7,000
70,000 x 10% = 7,000
This will decrease the tax liability and the company will have to adjust their retained earnigs as their previoius inocme statement for 20X1 consider taxes 7,000 higher than actual taxes levied.