Wholly Owned Subsidiary Has the Following Balances at Control Date

question 14

True/False

Wholly owned Subsidiary has the following balances at control date 20X1:
$$\begin{array} { l l } \text { Capital } & \$ 500000 \\\text { Asset revaluation reserve } & \$ 200000 \\\text { Retained profits } & \$ 100000\end{array}$$
Parent paid $900 000 for the shares of Subsidiary.The tax rate is 30%.
Subsidiary assets are at fair value except for land, which the Subsidiary measures at cost and group policy is for revaluation.The land at cost is $60 000 and the fair value is $150 000.
In the consolidation there will be a deferred tax liability of $27 000.

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Definitions:

Articles of Confederation

The first constitution of the United States, ratified in 1781, which established a loose federation of states with limited central government power, eventually replaced by the U.S. Constitution due to its inefficacy.

Governmental Concepts

Fundamental ideas or principles that form the basis of a government's structure, function, and approach to governance, such as democracy, federalism, and separation of powers.

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Treaty of Paris

An agreement signed in 1783 that ended the American Revolutionary War and recognized American independence from Britain.