A Ltd Sold an Item of Plant to Its Subsidiary

question 36

Multiple Choice

A Ltd sold an item of plant to its subsidiary, B Ltd, on 1 January 2017 for $25 000. The asset had cost A Ltd $30 000 and had an useful life of 6 years when acquired on 1 January 2015 from an external party. The adjustment necessary on consolidation in relation to the transfer of plant as at 30 June 2018 will result in:

• A) an increase in retained earnings and a decrease in current year profit.
• B) a decrease in retained earnings and an increase in current year profit.
• C) an increase in retained earnings and an increase in current year profit.
• D) a decrease in retained earnings and a decrease in current year profit.

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Definitions:

Filtration Membrane

A barrier in the kidneys that filters waste from the blood to form urine while retaining essential substances like proteins and blood cells.

Proximal Convoluted Tubule

The portion of the nephron in the kidney responsible for the reabsorption of water, ions, and all organic nutrients.

Filtrate

Liquid that has passed through a filter—for example, fluid that enters the nephron through the filtration membrane of the glomerulus.

Sympathetic Stimulation

Activation of the sympathetic nervous system, which increases heart rate, blood pressure, and energy availability, preparing the body for action.