Reference no: EM132986573
Question 1 - Tempest Ltd has accounts receivable of $900,000 and an associated doubtful debts allowance of $180,000. The revenue associated with the accounts receivable of $900,000 has already been included in taxable income. The doubtful debts will be deductible when the amount is actually written off as bad with a related deduction to accounts receivable.
Required -
i) Assuming that the tax rate is 30 per cent, what is the amount of the temporary difference?
ii) 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?
Question 2 - Fleece Ltd has a depreciable non-current asset that cost $30,000 and has a carrying amount of $20,000. For tax purposes, accumulated depreciation amounts to $18,000.
Required -
i) Assuming that the tax rate is 30 per cent, what is the amount of the temporary difference?
ii) 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?
Verbal and nonverbal response of receiver to sender
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