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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Definitions:

External Party

An individual or group outside of an organization that has a stake or interest in the business, such as suppliers, customers, or regulatory bodies.

Significant Factor

An element or aspect that has a major impact on the outcome or understanding of a situation or study.

Internal Or External

Terms used to distinguish between activities, communications, or entities originating within an organization (internal) versus those coming from outside it (external).

Analytical Report

A document that presents detailed analysis and evaluation of a specific issue or problem, often used in business or research.