Silver Bullet Limited has a product warranty liability amounting to $12 000. The product warranty costs are not tax deductible until paid out to customers. The company tax rate is 30%. The company has a:

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The deductible temporary difference is $12,000 because the warranty costs are not deductible for tax purposes until they are paid, meaning the company will be able to deduct these costs in the future, reducing future taxable income.

Silver Bullet Limited Has a Product Warranty Liability Amounting to $12