Reference no: EM132928152

Problem 1: Moon Limited, a subsidiary entity, sold a non-current asset at a loss to its parent entity, Sun Limited. The adjustment necessary on consolidation to reflect the tax effect of this transaction will result in a(n):

Select one:

Option 1: increase in deferred tax liabilities and income tax expense

Option 2: decrease in deferred tax liability and income tax expense

Option 3: increase in deferred tax assets and income tax expense

Option 4: decrease in deferred tax assets and income tax expense