Jameson Purchased Goods from Its Subsidiary for $10 000

question 10

Multiple Choice

Jameson purchased goods from its subsidiary for $10 000. The goods cost the subsidiary $6 000. The company rate of tax is 30%. Which of the following consolidation adjustment entries is correct?

• A) Dr Income tax expense $1 200 Cr Deferred tax liability $1 200.
• B) Dr Income tax expense $1 200 Cr Deferred tax asset $1 200.
• C) Dr Deferred tax asset $1 200 Cr Income tax expense $1 200.
• D) Dr Deferred tax liability $1 200 Cr Income tax expense $1 200.

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Definitions:

Heckscher-Ohlin Model

A model in international trade theory that explains patterns of trade between countries based on their differences in factor endowments.

Import Goods

These are products brought into one country from another for sale.

Scarce Factors

Resources that are limited in availability and are constraint to economic production.

Capital

Refers to financial assets or physical resources that are used in producing goods or providing services.