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

question 20

Multiple Choice

Matthew Limited, a subsidiary entity, sold a non-current asset at a profit to its parent entity during the current period. The adjustment necessary on consolidation to reflect the tax effect of this transaction will result in an:

• A) increase in retained earnings.
• B) decrease in retained earnings.
• C) increase in deferred tax assets.
• D) decrease in deferred tax liabilities.

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