Sherrin Ltd purchased goods from its subsidiary for $24 000. The goods cost the subsidiary $18 000. The company rate of tax is 30%. Which of the following consolidation adjustment entries is correct?
A) DR Income tax expense $1 800 CR Deferred tax liability $1 800.
B) DR Income tax expense $1 800 CR Deferred tax asset $1 800.
C) DR Deferred tax asset $1 800 CR Income tax expense $1 800.
D) DR Deferred tax liability $1 800 CR Income tax expense $1 800.

Question

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The Answer of Sherrin Ltd purchased goods from its subsidiary for $24 000. The goods cost the subsidiary $18 000. The company rate of tax is 30%. Which of the following consolidation adjustment entries is correct?
A) DR Income tax expense $1 800 CR Deferred tax liability $1 800.
B) DR Income tax expense $1 800 CR Deferred tax asset $1 800.
C) DR Deferred tax asset $1 800 CR Income tax expense $1 800.
D) DR Deferred tax liability $1 800 CR Income tax expense $1 800.

Sherrin Ltd Purchased Goods from Its Subsidiary for $24 000