On 31 December 20X1, an entity is carrying an asset in its balance sheet at a value of :6 million (:10 million cost less :4 million accumulated depreciation). Up to this date the entity has been able to charge :8 million as depreciation for determining taxable profit in the current and prior periods. The entity intends to continue using the asset in its business. Taxable income generated by the asset is taxed at 20 per cent.

What deferred tax liability should the entity recognize in its balance sheet of 31 December 20X1?

A. :0.6 million.

B. :0.8 million.

C. :1.2 million.

D. None of the above.