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PAYROLL ACCT.,2019 ED.(LL)-TEXT

PAYROLL ACCT.,2019 ED.(LL)-TEXT

19th Edition

ISBN:9781337619783

Author:BIEG

Publisher:BIEG

Chapter5: Unemployment Compensation Taxes

Section: Chapter Questions

Problem 5PA

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Question

A company has a provision for long service leave for
$35,000. In the same year, the company paid out $5,000 in
Long service leave to one of its long-serving employees.
Required:
A. What is the amount of the temporary difference?
B. Does this difference give rise to a deferred tax asset or
a deferred tax liability? What is the amount of this
deferred tax asset/liability? The tax rate is 30%.
C. Describe the accounting and tax treatment of the
$5,000 payment in the current year.

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