A consolidation worksheet adjustment to eliminate the effect of interest revenue and interest expense relating to intragroup loans has which of the following tax effects?
A) No tax effect
B) Increase in current tax liability
C) Increase in deferred tax liability
D) Decrease in deferred tax asset

Question

Quizplus · Accepted Answer

The consolidation worksheet adjustment to eliminate the effect of interest revenue and interest expense relating to intragroup loans is a purely accounting entry that does not affect the tax base of the assets or liabilities. Therefore, it has no tax effect.

A Consolidation Worksheet Adjustment to Eliminate the Effect of Interest