Deferring Recognition of an Intercompany Gain Is One Advantage/disadvantage) of Electing

question 53

Short Answer

Deferring recognition of an intercompany gain is one advantage/disadvantage) of electing to file consolidated returns.

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Definitions:

Contra Asset

An account on a company's balance sheet that reduces the value of a related asset, such as accumulated depreciation.

Expense Account

An account that records the costs incurred by a business in the process of earning revenue, part of the company's income statement.

Adjusting Entry

A record added in the books at the closing of an accounting cycle to note any unrecorded earnings or expenditures during that time.

Rent Revenue

Income received from leasing out properties or spaces to tenants.