Adam & Smith Ltd purchases a machine on 1/07/2019 for $450,000. The expected life is 6 years using the straight-line method and no residual value. For tax purposes, ATO allows the company to depreciate over 5 years. The profit before tax of the company for the year ended on 30 June 2020 is $550,000. The tax rate is 25%.

a) What is the amount of the temporary difference? Does this give rise to a deferred tax asset or a deferred tax liability? Provide relevant journal entries that relate to the temporary difference at 30 June 2020.

b) Determine the taxable profit and the taxes payable and provide relevant journal entries at 30 June 2015.

c) Provide one example of temporary differences that create a deferred tax asset and one example of deferred tax liability.