If an Entity Sells a Non-Current Asset at a Profit

question 50

Multiple Choice

If an entity sells a non-current asset at a profit to another entity within the same group, which of the following consolidation adjustments is necessary to reflect the tax effect?

• A) Dr Deferred tax asset
• B) Dr Deferred tax liability
• C) Dr Tax expense
• D) Cr Deferred tax asset

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Definitions:

Underestimate

To judge something to be smaller or less important than it actually is.

Politicians

Individuals who are actively involved in politics, especially as an elected official in a governmental role.

Dissonance Reduction

The process of reducing psychological discomfort by rationalizing or changing one's attitudes or beliefs to be more consistent with one's actions.

Justification of Effort

The tendency to attribute a higher value to outcomes that require a greater amount of effort to achieve.