P Ltd Acquired Inventories for $150,000 Which Were Sold to Its

question 23

Multiple Choice

P Ltd acquired inventories for $150,000 which were sold to its subsidiary S Ltd for $120,000 (assume a tax rate of 30%) On consolidation a deferred tax liability would be recorded for:

• A) $45,000
• B) $36,000
• C) $9,000
• D) Not recorded

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Definitions:

Federal Government

The national government of a federal country, where power is divided between the central authority and constituent units or states.

Henry Clay

An American statesman and lawyer who served as a pivotal figure in the U.S. politics during the first half of the 19th century, known for his Compromise Measures and as a leading war hawk.

Bonus Bill

Legislation proposed after the War of 1812 to allocate federal funds for the construction of roads and canals, which was vetoed by President Madison in 1817 on constitutional grounds.

Unconstitutional

Something that is not in accordance with the constitution of a country or government, and therefore is considered illegal or void.