Sea Otter Ltd Uses the Revaluation Model for All Classes

question 20

Multiple Choice

Sea Otter Ltd uses the revaluation model for all classes of property, plant and equipment. The following information relates to two items of nlant the CRM650 and DRM700

$\begin{array}{llcc} \text { } & \text { CRM650}& \text {DRM700} \\ \text {Cost (acquisition date \( 1 / 1 / 20 \mathrm{X} 1 \) ) } &\$5000000&\$8000000\\ \text { Useful life - taxation } &8\text {years}&8\text {years} \\ \text { Useful life - accounting } &10\text {years}&5\text {years}\\ \text { Fair value \( 36 / 06 / 20 \mathrm{X} 2 \) } &\$5400000&\$7500000\\ \text { } &\\\end{array}$

-For the CRM650, the difference in depreciation for tax and accounting purposes for the year ending 30/06/20X2 results in:

• A)a taxable temporary difference of $600 000
• B)a deductible temporary difference of $600 000
• C)a deferred tax revenue and a deferred tax liability of $37 500
• D)a deferred tax revenue and deferred tax asset of $37 500

Identify the costs associated with corporate default, including direct and indirect bankruptcy costs.

Understand the principles for choosing an optimal capital structure that balances tax benefits, financial distress costs, and investment policy considerations.

Understand the impact of inequality and poverty on health and social structures.

Analyze the effects of globalization on local cultures and economies.

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Definitions:

Externality

An economic side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in market prices, either positively or negatively.

Steel Industry

A sector of the economy that deals with the production, distribution, and consumption of steel products.

External Costs

External costs refer to the expenses that are not directly accounted for in the purchase price of a product or service, often involving environmental or societal impacts.

Market Price

The ongoing price level for buying or selling an asset or service in the open market.