How much will be the adjustment to be made against profit

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Problem 1: On 1 January 2022, Toyboys Ltd acquired all the issued shares of Dragonfly Ltd. At that date, the plant of Dragonfly Ltd had a fair value of $10 000 more than its carrying amount and an estimated useful life of 5 years. Dragonfly Ltd depreciates the plant on a straight-line basis. The tax rate is 30%. How much will be the adjustment to be made against profit or loss in relation to this plant at 30 June 2024?

A. a debit of $1 400
B. a credit of $4 000
C. a credit of $2 800
D. a debit of $2 000

Reference no: EM132986297

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