A Consolidation Worksheet Adjustment to Eliminate the Effect of Interest

question 10

Multiple Choice

A consolidation worksheet adjustment to eliminate the effect of interest revenue and interest expense relating to intragroup advances has the following tax effect:

• A) No tax effect;
• B) Increase in deferred tax asset;
• C) Increase in deferred tax liability;
• D) Decrease in income tax expense.

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Definitions:

Reinforcement

In behavioral psychology, a process in which a behavior is encouraged or strengthened by a consequence that follows it.

Behavior

The way in which one acts or conducts oneself, especially towards others, shaped by learning, perception, and external stimuli.

Encoding

The process of converting information into a form that can be stored in memory.

Preparedness

A psychological term referring to a predisposition to learn certain types of behaviors or concepts more easily than others, often due to evolutionary pressures.