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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 Please donot provide solution in image format provide solution in step by step format and asap

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 Please donot provide solution in image format provide solution in step by step format and asap

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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