Sky Limited, a Subsidiary Entity, Sold a Non-Current Asset at a Profit

question 29

Multiple Choice

Sky Limited, a subsidiary entity, sold a non-current asset at a profit to its parent entity, Dive Limited. The adjustment necessary on consolidation to reflect the tax effect of this transaction will result in a(n) :

• A) increase in deferred tax assets.
• B) increase in deferred tax liabilities.
• C) increase in income tax expense.
• D) decrease in deferred tax assets.

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Definitions:

Advanced Analysis

Involves the use of sophisticated techniques and tools to examine data or problems to derive deeper insights or solutions.

P = 4 + 3Q

A linear equation representing a direct relationship between price (P) and quantity (Q), where 4 is the fixed component, and 3 indicates the change in price per unit change in quantity.

Consumer Substitute

A product or service that consumers can choose as an alternative to another, similar product.

Supply Of Wheat

The quantity of wheat available in the market from producers at various price levels.