Lesser Ltd Is Wholly Owned by Moore Ltd

question 20

Multiple Choice

Lesser Ltd is wholly owned by Moore Ltd. In the current year Lesser Ltd has made a tax loss of $200,000 and Moore Ltd has made a profit of $300,000. It is expected that Lesser Ltd will make sufficient profits in the future to utilise the benefits of the tax loss, so Lesser has recorded a deferral for the loss. Moore pays Lesser $10,000 consideration for the transfer of the tax loss. Neither Moore nor Lesser have elected to be part of a tax consolidated group. The taxation rate is 30 per cent. What are the appropriate entries to record the transfer (only) ?

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Definitions:

Mitochondrion

Double-membraned organelle that produces ATP by aerobic respiration in eukaryotes.

Aerobic Respiration

A metabolic process that uses oxygen to convert glucose or other organic molecules into energy (ATP), carbon dioxide, and water.

Electrons

Negatively charged subatomic particles orbiting the nucleus of an atom.

Citric Acid Cycle

A key metabolic pathway that takes place in the mitochondria, involving the oxidation of acetyl-CoA to carbon dioxide and ATP production, also known as the Krebs cycle.