What is the amount of the temporary difference

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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?

Reference no: EM132986573

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