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