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.

Understand the concept and significance of dividend yield and its relation to the stock's market price.

Define and explain the legal financial obligations of stock buyers towards the corporation.

Identify and describe the process and impact of making corrections to prior financial statements.

Comprehend various types of shares and their role in owner financing in corporations.

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Definitions:

Responsibility Accounting Reports

Financial reports that measure the financial performance of different segments or departments of an organization, attributing revenues and expenses to the managers responsible.

Higher Levels

A term indicating advanced stages or degrees of complexity, often used in reference to education, management, or organizational structure.

Management

The process of coordinating and overseeing the work activities of others to achieve organizational goals efficiently and effectively.

Direct Expense

Costs that can be directly attributed to the production of specific goods or services, such as raw materials and labor.