What Effect Will the Adjustment for the Realization of the Intercompany

question 5

Multiple Choice

What effect will the adjustment for the realization of the intercompany gain (in the preparation of the consolidated income statement) have on consolidated income tax expense for 2017?

• A) It will have no effect.
• B) It will reduce income tax expense by $24,000.
• C) It will reduce income tax expense by $18,000.
• D)It will increase income tax expense by $24,000.

---

Definitions:

Hypothesis

A proposed explanation for a phenomenon, serving as the starting point for further investigation through experimentation and observation.

Pseudoscience

Claims, beliefs, or practices presented as scientific but lacking empirical evidence or falsifiability, not adhering to the scientific method.

Testable Explanation

A hypothesis or theory that can be put to the test, designed to explain phenomena in the natural world.

Hypothesis

An initial hypothesis put forward to explain a phenomenon that serves as a basis for further study and can be verified by experimental and observational means.