The Tax Effect of Eliminating the Unrealised Profit from an Intragroup

question 19

Multiple Choice

The tax effect of eliminating the unrealised profit from an intragroup sale of inventories and adjusting the value of the inventories on hand is recognised as:

• A) an increase in deferred tax liability.
• B) a decrease in deferred tax liability.
• C) an increase in deferred tax asset.
• D) an increase in income tax expense.

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Definitions:

Parsimonious

Refers to extreme unwillingness to spend money or use resources.

Enduring Truth

A concept or fact that remains valid and reliable over time.

Phenomena

Observable events or occurrences that can be studied scientifically to understand natural or social processes.

Phenylketonuria (PKU)

A genetic disorder caused by a defect in the gene responsible for processing the amino acid phenylalanine, leading to its accumulation and resulting in cognitive disability if untreated.