Adam Ltd Sold an Item of Plant to Its Subsidiary

Multiple Choice

Adam Ltd sold an item of plant to its subsidiary Eve Ltd on 1 January 2017 for $50 000. The asset had cost Adam Ltd $60 000 when acquired on 1 January 2015. At that time, the remaining useful life of the plant was assessed at 5 years. The adjustment necessary on consolidation to reflect the tax effect of the depreciation adjustment for the year ended 30 June 2017 will result in a decrease in:

A) deferred tax assets.
B) deferred tax liabilities.
C) income tax expense.
D) current tax liability.