Sub sells an asset to Parent at a realized loss.That loss is not recognized by the group in the year of the sale,because of the:
A)Matching rule.
B)Acceleration 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 states that a loss cannot be recognized until the asset is sold to an unrelated third party or until the asset's future economic benefits are permanently impaired. Since the asset is sold to Parent, which is a related party, the loss cannot be recognized in the year of the sale.

Sub Sells an Asset to Parent at a Realized Loss