Sea Otter Ltd Uses the Revaluation Model for All Classes

question 7

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 DRM700, 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 and a deferred tax liability of $180 000
• B)a deductible temporary difference of $600 000 a deferred tax liability of $180 000
• C)a deferred tax expense and a deferred tax liability of $37 500
• D)a deferred tax revenue and deferred tax asset of $180 000

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