Sky Limited, a Subsidiary Entity, Sold a Non-Current Asset at a Profit

question 29

Multiple Choice

Sky Limited, a subsidiary entity, sold a non-current asset at a profit to its parent entity, Dive Limited. The adjustment necessary on consolidation to reflect the tax effect of this transaction will result in a(n) :

• A) increase in deferred tax assets.
• B) increase in deferred tax liabilities.
• C) increase in income tax expense.
• D) decrease in deferred tax assets.

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Definitions:

SBAR

An acronym for Situation, Background, Assessment, Recommendation; a communication protocol used in healthcare to facilitate prompt and appropriate communication.

Modified Branch

A branch that has undergone changes to serve a specific function other than structural support, such as storage or reproduction.

Spine

A sharp, pointed modified leaf or stem part of a plant that serves as a defense mechanism against herbivores.

Blue Light

A portion of the visible light spectrum, known for its high energy and potential impacts on plant growth, human circadian rhythms, and digital eye strain.