A Ltd Sells to Its Subsidiary, J Ltd, an Item

Multiple Choice

A Ltd sells to its subsidiary, J Ltd, an item of inventories on 1 January 2017 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 2017 would include the following adjustment:

A) Dr Plant $3 000.
B) Cr Plant $3 000.
C) Dr Inventories $3 000.
D) Cr Inventories $3 000.