Question
A company has accounts receivable of $300 000 and an associated doubtful debts allowance of $60 000. The revenue associated with the accounts receivable of
A company has accounts receivable of $300 000 and an associated doubtful debts allowance 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 deduction to accounts receivable.
REQUIRED
a) Assuming that the tax rate is 30 percent, 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
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South Western Federal Taxation 2015
Authors: William H. Hoffman, William A. Raabe, David M. Maloney, James C. Young
38th Edition
978-1305310810, 1305310810, 978-1285439631
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