Janus Limited,a subsidiary entity,sold a non-current asset at a profit to its parent entity.The adjustment necessary on consolidation to reflect the tax effect of this transaction will result in an:

Question

Quizplus · Accepted Answer

The profit on the sale of the non-current asset is eliminated on consolidation, creating a temporary difference. This results in an increase in deferred tax assets, as the tax base of the asset is higher than its carrying amount in the consolidated financial statements.

Janus Limited,a Subsidiary Entity,sold a Non-Current Asset at a Profit