Knights Ltd Purchased Inventory from Its Subsidiary,Gidley Ltd,for $20 000

Multiple Choice

Knights Ltd purchased inventory from its subsidiary,Gidley Ltd,for $20 000.The goods originally cost Gidley Ltd $12 000.The company tax rate is 30%.Assuming that all of the inventory was still on hand at the end of the year,which of the following consolidation adjustment entries is required?

A) Dr Tax expense $2400; Cr Deferred tax liability $2400
B) Dr Tax expense $2400; Cr Deferred tax asset $2400
C) Dr Deferred tax asset $2400; Cr Tax expense $2400
D) Dr Deferred tax liability $2400; Cr Tax expense $2400