NewsMonth has $10,000,000 of Deferred revenue - subscriptions. NewsMonth recognizes income for tax purposes when cash is collected, and pays tax at a rate of 35%. NewsMonth's balance sheet should include a:

a. Deferred tax asset of $3,500,000.
b. Deferred tax asset of $6,500,000.
c. Deferred tax liability of $3,500,000
d. Deferred tax liability of $6,500,000.

Ans: a. Deferred tax asset of $3,500,000.