On consolidation, adjustment to deferred tax assets and liabilities is required for: a. unrealised intragroup profits b. unrealised intragroup losses c. fair value adjustments d. all of the above
Question
On consolidation, adjustment to deferred tax assets and liabilities is required for: a. unrealised intragroup profits b. unrealised intragroup losses c. fair value adjustments d. all of the above
Solution
d. all of the above
When consolidating, adjustments to deferred tax assets and liabilities are required for all of the above options.
a. Unrealised intragroup profits: These are profits that have been recorded in the books but have not yet been realized through a transaction. They are eliminated on consolidation to avoid double counting of profits. The elimination of these profits can have tax implications, which may require an adjustment to deferred tax assets or liabilities.
b. Unrealised intragroup losses: Similar to unrealised intragroup profits, these are losses that have been recorded in the books but have not yet been realized. They are also eliminated on consolidation, which can have tax implications requiring an adjustment to deferred tax assets or liabilities.
c. Fair value adjustments: These are adjustments made to the carrying value of an asset or liability to reflect its fair value. These adjustments can have tax implications, which may require an adjustment to deferred tax assets or liabilities.
Similar Questions
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