A company has a liability for employee benefits (relating to long-service leave) with a carrying amount of $400 000, which will be deductible when the amounts are actually paid. The company has also accrued wages with a carrying amount of $200 000, which have already been claimed as a deduction for tax purposes.

REQUIRED

A.Assuming that the tax rate is 25 per cent, what is the amount of the temporary difference?

B.Does this give rise to a deferred tax asset or a deferred tax liability, and what is the amount of the deferred tax asset/liability?