On December 31,2011,XYZ Inc.has an account payable of $2,000 for operating expenses incurred during the year.These expenses are only tax deductible when paid.XYZ normally pays for its operating expenses one month after they are incurred.Assuming a 20% tax rate,these expenses shall result in:

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The expenses are deductible for tax purposes only when paid, creating a temporary difference. This results in a deferred tax asset because the company will have a future tax benefit when the expenses are paid. The deferred tax asset is calculated as $2,000 * 20% = $400.