SubCo sells an asset to ParentCo at a realized loss.That loss is not recognized by the group in the year of the sale,because of the:
A)Acceleration rule.
B)Matching rule.
C)Transfer pricing rules.
D)Wash sale rule.
E)None of the above.The group deducts the loss.

Question

Quizplus · Accepted Answer

The matching rule requires that losses and gains are recognized in the same period as the related transactions or events. Since the loss on the sale of the asset is not recognized in the year of the sale, it indicates that the group is following the matching rule. The other options are not applicable in this scenario.

SubCo Sells an Asset to ParentCo at a Realized Loss