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Hi Professor,
Tax applys to both Parent company and sub company where there is an intragroup sales from sub to Parent company. I wonder how can I identify this temporary difference leads to “deferred tax asset” or “deferred tax liability”. I am confused about whether effect of unrealised profit always causes “deferred tax asset” instead of “deferred tax liability”. Thanks in advance.
Hi Professor,
I just discovered the explanation from BPP Text. It really helps.
“Circumstances that give rise to deductible temporary differences: Unrealised profits resulting from intra-group transactions are eliminated from the carrying amount of assets, such as inventory or property, plant or equipment, but no equivalent adjustment is made for tax purposes.”Sorry for bothering you.
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