Abra Ltd sold an item of plant to its subsidiary Cadabra Ltd on 1 July 2017 for $50 000. The asset had cost Abra Ltd $60 000 when acquired on 1 January 2015. At that time the useful life of the plant was assessed at 6 years. Which of the following entries is needed to account for the transaction in the consolidation elimination entries at 30 June 2018? Tax rate is 30%. Select one: O a. O b. C. O d. Dr Cr Dr Cr Dr Cr Dr Cr Gain on sale of plant Plant Plant Gain on sale of plant Income tax expense Deferred tax liability Gain on sale of plant Plant 15,000 10,000 3,000 10,000 15,000 10,000 3,000 10,000

Abra Ltd sold an item of plant to its subsidiary Cadabra Ltd on 1 July 2017 for $50 000. The asset had cost Abra Ltd $60 000 when acquired on 1 January 2015. At that time the useful life of the plant was assessed at 6 years. Which of the following entries is needed to account for the transaction in the consolidation elimination entries at 30 June 2018? Tax rate is 30%. Select one: O a. O b. C. O d. Dr Cr Dr Cr Dr Cr Dr Cr Gain on sale of plant Plant Plant Gain on sale of plant Income tax expense Deferred tax liability Gain on sale of plant Plant 15,000 10,000 3,000 10,000 15,000 10,000 3,000 10,000

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 75P

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Abra Ltd sold an item of plant to its subsidiary Cadabra Ltd on 1 January 2017 for $50 000. The asset had cost Abra Ltd $60 000 when acquired on 1 January 2015. At that time the useful life of the plant was assessed at 6 years. Rounded to the nearest dollar, the consolidation elimination entries at 30 June 2017 in relation to the sale of plant are which of the following? a. Gain on sale Dr 10 000 Plant Cr 10 000 Deferred tax asset Dr 3 000 Income tax expense Cr 3 000 Accumulated depreciation Dr 1 250 Depreciation expense Cr 1 250 Income tax expense Dr 375 Deferred tax asset Cr 375 b. Accumulated depreciation Dr 10 000 Gain on sale Dr 10 000 Plant Cr 20 000 Deferred tax asset Dr 3 000 Income tax expense Cr 3 000 Accumulated…
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