Master of Professional Accounting

MPA 505 Corporate Accounting

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In-Class Activity Week 4 Lecture 7 and 8 to be submitted 8:30 23 June 2023

Question One

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 per cent, 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

Question Two

A company has interest receivable with a carrying amount of $400 000. The related revenue
will be taxed by the ATO when the amounts are actually received.

REQUIRED

a) Assuming that the tax rate is 30 per cent, 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