Abra Ltd Sold an Item of Plant to Its Subsidiary

Short Answer

Abra Ltd sold an item of plant to its subsidiary Cadabra Ltd on 1 January 2017 for $50 000. The asset had cost Abra Ltd $60 000 when acquired on 1 January 2015. At that time the useful life of the plant was assessed at 6 years. Rounded to the nearest dollar, the consolidation elimination entries at 30 June 2017 in relation to the sale of plant are which of the following? $\begin{array}{llrr}\text { Accumulated depreciation } & \mathrm{Dr} & 15000 & \\\text { Gain on sale } & \mathrm{Dr} & 5000 & 20000 \\\quad \text { Plant } & \mathrm{Cr} & & \\\text { Deferred tax asset } & \mathrm{Dr} & 1500 & \\\text { Income tax expense } & \mathrm{Cr} & &1500\end{array}$
$\begin{array}{clcc}\text { Accumulated depreciation } & \mathrm{Dr} & 1250 & \\\text { Depreciation expense } & \mathrm{Cr} & & 1250 \\\text { Incometax expense } & \mathrm{Dr} & 375 & \\\text { Deferred tax asset. } & \mathrm{Cr} & &375 \end{array}$