If an entity sells a non-current asset at a profit to another entity within the same group the following consolidation adjustment is necessary to reflect the tax effect:

Question

Quizplus · Accepted Answer

The profit on the sale of a non-current asset within the same group is not realized for tax purposes until the asset is sold outside the group. Therefore, a deferred tax asset is recognized to reflect the future tax benefit when the profit is realized.

If an Entity Sells a Non-Current Asset at a Profit