Judith Ltd B)Dr Deferred Tax Liability $\quad$ $\quad$ $\$ 15000$

question 16

Multiple Choice

Judith Ltd.took control of Athol Ltd on 1 January 20X5.Athol does not depreciate buildings but Judith group does.The building is shown by Athol at cost at $500 000.The Judith group depreciation rate for buildings is 10% p.a.The tax rate is 30%.
What would be the consolidation data adjustment entry for 31 December 20X5?

• A)\(\begin{array}{llcc}
• \text { Dr. Depreciation expense-buildings } &\$5000 \\
• \text { Cr. Accumulated depreciation-buildings} &&\$5000\\
• \text { Dr. Deferred tax asset } &\$1500\\
• \text {Cr. Deferred tax revenue } &&\$1500\\
• \end{array}\)
• B)Dr. Deferred tax liability \(\quad \) \(\quad \)\(\$ 15000\)
• Cr. Deferred tax expense \(\quad \) \(\quad \)\(\quad \) \(\quad \) \(\quad \) \(\quad \) \(\$ 15000\)
• C)\(\begin{array}{llcc}
• \text { Dr. Depreciation expense-buildings } &\$5000 \\
• \text { Cr. Accumulated depreciation-buildings} &&\$5000\\
• \text { Dr. Deferred tax revenue } &\$1500\\
• \text {Cr. Deferred tax liability } &&\$1500\\
• \end{array}\)
• D)No entry required

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