S Ltd acquired land from its parent company P Ltd for $1 000 000.The land had originally cost P Ltd $100 000 (assume a tax rate of 30%).On consolidation,the deferred tax asset will be recorded at:
A) $300 000.
B) $30 000.
C) $270 000.
D) not recorded.

Question

Quizplus · Accepted Answer

The deferred tax asset will be recorded at $300,000, which is the difference between the acquisition cost of $1,000,000 and the original cost of $100,000, multiplied by the tax rate of 30%.

S Ltd Acquired Land from Its Parent Company P Ltd