In consolidated financial statements of a parent and subsidiaries, an income tax adjustment is necessary:

Question

Quizplus · Accepted Answer

Income tax adjustments in consolidated financial statements are necessary when unrealized profit causes a difference between the carrying amount of an asset and the carrying amount shown in the consolidated financial statements. This is because the unrealized profit affects the group's taxable income, requiring an adjustment to reflect the correct tax liability or asset for the group as a whole.

In Consolidated Financial Statements of a Parent and Subsidiaries, an Income