A Ltd Sells to J Ltd an Item of Inventory

Multiple Choice

A Ltd sells to J Ltd an item of inventory on 1 January 20X3 for $6 000. The item cost A Ltd $3 000 earlier in the current year. J Ltd intends to use the item as plant with a useful life of 10 years, and no estimated salvage value. A straight-line depreciation rate of 10% p.a. is applicable. The tax rate is 30%. The worksheet entry for the year ended 30 June 20X3 would include the following adjustment:

A) DR Plant 3 000
B) CR Plant 3 000
C) DR Inventory 3 000
D) CR Inventory 3 000