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What is a temporary difference in deferred tax calculation?

Deferred tax calculation

Temporary differences between accounting profit and taxable profit arise when revenues and expenses are recognized in different periods from those in which such revenues and expenses are treated as taxable income and allowable deductions.

Differences that result in the entity paying more tax in the future, for example when interest is received, are known as taxable temporary differences. Differences that result in the entity recovering tax via additional deductible expenses in the future, for example when accrued expenses are paid, are known as deductible temporary differences

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