Speculator Limited acquired a parcel of land for $50 000.This amount is also the tax base of the land.Two years after acquisition date the building was revalued to $80 000.The tax rate is 30%.The appropriate journal entry to recognise the net effect of the revaluation is:

Question

Quizplus · Accepted Answer

The revaluation increases the land's carrying amount by $30,000. The deferred tax liability is $9,000 (30% of $30,000), and the asset revaluation surplus is $21,000 ($30,000 - $9,000).

Speculator Limited Acquired a Parcel of Land for $50 000