A Subsidiary Sold Inventory to a Parent Entity for €10

Multiple Choice

A subsidiary sold inventory to a parent entity for €10 000. The inventory originally cost the subsidiary €6000. At the end of the reporting period the parent had sold 50% of the inventory to an external party. The company tax rate is 30%. The deferred tax item that is recognised on consolidation is:

A) CR Deferred tax liability €1 200
B) CR Deferred tax liability €600
C) DR Deferred tax asset €1 200
D) DR Deferred tax asset €600.