Find the consolidation adjusting entry to record the tax

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Question - Fish Ltd acquired all the shares in Molee Ltd on 1 July 2016. All the net assets of Molee Ltd was at fair value at the date of acquisition except for an equipment, which has a carrying amount of $235,000 (cost is $280,000) in the books of Molee Ltd. At the date of acquisition, the fair value of the equipment is $265,000 and the remaining useful life of the equipment is 4.5 years.

Find the consolidation adjusting entry to record the tax effect on the depreciation expense at 30 June 2021?

Dr Deferred tax asset $8,000

Cr Income tax expense $1,000

Dr Deferred tax asset $2,000

Cr Income tax expense $2,000

Reference no: EM132634708

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