Where the value of an investment in a subsidiary increases,a deferred tax liability is generally not required to be recognised when:
A) it is unlikely that profits of the subsidiary will be distributed as dividends.
B) it is unlikely that the subsidiary investment will be sold.
C) both A and B.
D) none of the above.

Question

Quizplus · Accepted Answer

A deferred tax liability is generally not required to be recognized when it is unlikely that the profits of the subsidiary will be distributed as dividends or the subsidiary investment will be sold, as there would be no taxable event expected in the foreseeable future.

Where the Value of an Investment in a Subsidiary Increases,a