Jameson Purchased Goods from Its Subsidiary for $10 000

question 5

Multiple Choice

Jameson purchased goods from its subsidiary for $10 000. The goods cost the subsidiary $6000. The company rate of tax is 30%. Which of the following consolidation adjustment entries is correct?

• A) DR Tax expense $1 200, CR Deferred tax liability $1 200
• B) DR Tax expense $1 200, CR Deferred tax asset $1 200
• C) DR Deferred tax asset $1 200, CR Tax expense $1 200
• D) DR Deferred tax liability $1 200, CR Tax expense $1 200

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