Knights Ltd Purchased Inventory from Its Subsidiary,Gidley Ltd,for $20 000

question 32

Multiple Choice

Knights Ltd purchased inventory from its subsidiary,Gidley Ltd,for $20 000.The goods originally cost Gidley Ltd $12 000.The company tax rate is 30%.Assuming that all of the inventory was still on hand at the end of the year,which of the following consolidation adjustment entries is required?

• A)Dr Tax expense $2400; Cr Deferred tax liability $2400
• B)Dr Tax expense $2400; Cr Deferred tax asset $2400
• C)Dr Deferred tax asset $2400; Cr Tax expense $2400
• D)Dr Deferred tax liability $2400; Cr Tax expense $2400

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Definitions:

Sodium

A chemical element with the symbol Na, known for its high reactivity and essential role in biological systems, especially in nerve impulse conduction.

Covalent

Pertaining to chemical bonds formed by the sharing of one or more pairs of electrons between atoms.

Ionic

Relating to ions; typically describes chemical bonds formed between atoms when electrons are transferred, resulting in charged particles.

Metallic

Pertaining to elements that exhibit metallic properties, including luster, conductivity, and malleability.