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Hi CFACOUNTRY,

thanks for the explanation. Here come the confusing part which i'm still trying to comprehend.
Based on what you have mention that the company actually paid out $40,460 but has only reported $31,960, can i consider the value $40,460 as tax expense?
It is because since $40,460 has to be paid out, it will be consider as an expense. (correct me if i'm wrong)

I'm confused because according to the kaplan notes on LOS 38.b under study session 9, it defines deferred tax liability as:
A deferred tax liability is created when income tax expense (income statement) is greater than tax payable due to temporary difference.

Thanks