A company has account receivable of $300,00 and an associated allowance for doubtful debts of $60,000. The revenue associated with the accounts receivable of $300,000 has already been included in taxable profit. The doubtful debts will be deductible when the amount is actually written off as bad with a related reduction to the account receivable.

Required

1. Assuming the tax rate is 30%, what is the amount of the temporary difference?
2. Does this give rise to a deferred tax asset, or a deferred tax liability? What is the amount of the deferred tax asset/liability?