Question
Use the following information to answer this question. An extract of a company's draft statement of financial position at 30 June 2012 discloses the following:
Use the following information to answer this question.
An extract of a company's draft statement of financial position at 30 June 2012 discloses the following:
Plant (atcost)$500 000
Lessaccumulateddepreciation300000$200 000
On 30 June 2013 the company assessed the fair value of the plant to be $350 000. At 30 June 2014, the carrying amount of the plant was $250 000.
The tax rate is 30%. Depreciation rates are 10% p.a. (accounting) and 12.5% p.a. (tax) using the straight-line method.
The journal entries to adjust for the tax effect of the revaluation at 30 June 2013 is:
a.
Income tax expense OCI
Dr
45 000
Deferred tax liability
Cr
45 000
b.
Asset revaluation surplus
Dr
45 000
Income tax expense OCI
Cr
45 000
c.
Income tax expense OCI
Dr
45 000
Asset revaluation surplus
Cr
45 000
d.
Income tax expense OCI
Dr
45 000
Deferred tax liability
Cr
45 000
Gain on revaluation OCI
Dr
150 000
Income tax expense OCI
Cr
45 000
Asset revaluation surplus
Cr
105 000
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