Use the Following Information to Answer This Question B) C)

question 9

Multiple Choice

Use the following information to answer this question. The draft statement of financial position for Banjo Ltd as at 30 June 2021 discloses the following:
Machinery (at cost) $750 000
Less Accumulated depreciation 400 000 $350 000
On the same date, Banjo Ltd assessed the fair value of the machinery to be $400 000.
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 2021 is:

• A) \(\begin{array}{cccc}
• \text { Income tax expense - OCI } & \mathrm{Dr} & 15,000 & \\
• \text { Deferred tax liability } & \mathrm{Cr} & & 15,000
• \end{array}\)
• B) \(\begin{array}{clll}
• \text { Asset revaluation surplus } & \mathrm{Dr} & 15,000 & \\
• \text { Income tax expense - OCI } & \mathrm{Cr} & & 15,000
• \end{array}\)
• C) \(\begin{array}{rlll}
• \text { Income tax expense - OCI } & \mathrm{Dr} & 15,000 & \\
• \text { Asset revaluation surplus } & \mathrm{Cr} & & 15,000
• \end{array}\)
• D) \(\begin{array}{cll}\text { Income tax exp ense - OCI } & \mathrm{Dr}&15,000 \\
• \text { Deferred tax liability } & \mathrm{Cr}&&15,000\\
• \\\text { Gain on revaluation - OCI } & \mathrm{Dr} & 50,000 \\
• \text { Income tax expense - OCI } & \mathrm{Cr} &&15,000 \\
• \text { Asset revaluation surplus } & \mathrm{Cr} &&35,000
• \end{array}\)

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