During the current period, Rosina Limited paid an interim dividend of $60 000 to its parent entity, Anastasia Limited. If the tax rate is 30%, what would be the adjustment made in the consolidation entry to record the tax effect of this transaction at the end of the period?

Question

Quizplus · Accepted Answer

Intercompany dividends, such as the dividend from Rosina Limited to its parent entity Anastasia Limited, do not have a tax effect in the consolidation process because they are eliminated upon consolidation. Therefore, no tax-related adjustment is necessary for the dividend transaction itself.

During the Current Period, Rosina Limited Paid an Interim Dividend