Q1At the end of the current year, Lorne Ltd has an asset with a carrying value of $60,000 and the tax base of $40,000. Depreciation expense recognised for the current year is $6,000 while $4,000 was deducted for tax purpose. The tax rate is 30%. Based on the information given, which one of the following statements about the movements of deferred tax liability (DTL) or deferred tax asset (DTA) during the year is correct? A) DTL decreased by $600 B) DTA increased by $600 C) DTL decreased by $6,000 D) DTA increased by $6,000

Q2Past Ltd has an internally generated brand at the beginning of its business operation. So far this brand has been used for more than 20 years. At the end of current year, this brand is valued at $2,000,000. It is sold at the price of $2,500,000. The recording of this sale transaction is: A) Dr. Cash 2,500,000; Cr. Asset 2,000,000 Cr. Gain on sale 500,000 B) Dr. Cash 2,500,000; Cr. Asset 2,500,000 C) Dr. Cash 2,500,000 Cr. Gain on sale 2,500,000 D) Dr. Cash 2,500,000 Cr. Gain on sale 2,000,000 Cr. Revaluation surplus 500,000