Water Limited Acquired Boy Limited for a Purchase Consideration of $110

Water Limited acquired Boy Limited for a purchase consideration of $110 000. At acquisition date the fair value of the Boy Limited's Land asset was $80 000 and the carrying amount was $60 000. If the company tax rate is 30%, which of the following is the appropriate adjustment to recognise the tax effect of the business combination revaluation of land?

A) DR Deferred tax liability $6 000
B) CR Deferred tax liability $6 000
C) DR Deferred tax asset $6 000
D) CR Deferred tax asset $6 000

Correct Answer:

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