Sea Otter Ltd Uses the Revaluation Model for All Classes

question 5

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 revaluation on 30/06/20X2 results in:

• A)a deductible temporary difference of $1 025 000 and a DTL of $307 500
• B)a deferred tax expense and DTL of $307 500, and asset revaluation reserve increment of $717 500
• C)a DTA of $307 500 and asset revaluation reserve increment of $717 500
• D)asset revaluation reserve increment of $1 025 000 and a deferred tax expense and DTL of $307 500.

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Definitions:

Yeast

Single-celled fungus.

Inclusive Fitness

Genetic contribution an individual makes by reproducing, plus a fraction of the contribution it makes by facilitating reproduction of relatives.

Altruistic Behavior

Actions by an individual that benefit others at a cost to oneself, observed in social species, which may promote cooperation and social cohesion.

Kin Selection

Type of natural selection in which individuals with the highest inclusive fitness are favored.