A company has a provision for long service leave of $150,000. This amount was recognised as an expense when the provision was created but is deductible for income tax purposes when the leave is taken. If an employee takes long service leave and is paid an amount of $30,000 (and the company income tax rate is 30%), the following entry should be made:
A Dr Deferred Income Tax Expense $9 000 Cr Deferred Tax Asset $9 000
B Dr Deferred Tax Asset $9 000 Cr Deferred Income Tax Expense $9 000
C Dr Deferred Tax Liability $9 000 Cr Income Tax Payable $9 000
D Dr Income Tax Payable 9 000 Cr Deferred Tax Liability $9 000