An extract of a companys draft statement of financial position at 30 June 2012 discloses the following:
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Question:
An extract of a company’s draft statement of financial position at 30 June 2012 discloses the following:
Plant (at cost) | $500 000 |
Less Accumulated Depreciation | 300 000 |
$200 000 |
On 30 June 2012 the company assessed the fair value of the plant to be $350 000. The tax rate is 30%. Depreciation rates are 10% p.a. (accounting) and 12.5% p.a. (tax) using the straight-line method.
The net effect of the journal entries to adjust for the tax effect of the revaluation at 30 June 2012 is:
Select one:
a.
Income tax expense | Dr | 45 000 | |
Deferred tax liability | Cr | 45 000 |
b.
Asset revaluation surplus | Dr | 45 000 | |
Income tax expense | Cr | 45 000 |
c.
Income tax expense | Dr | 45 000 | |
Asset revaluation surplus | Cr | 45 000 |
d.
Asset revaluation surplus | Dr | 45 000 | |
Deferred tax liability | Cr | 45 000 |
Related Book For
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville
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