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What deferred income tax adjustment must Morin make for its consolidated financial statements?
A) Adjustment for any changes in temporary differences due to the difference between carrying values and tax bases of Lightfoot's depreciable capital assets
B) Adjustment for any changes in temporary differences due to the amortization of fair value increments
C) Adjustment for any changes in temporary differences due to the amortization of goodwill
D) No adjustment is necessary.
Deferred Income Tax
Income tax obligations that a company has accrued but not yet paid, appearing on the balance sheet as a liability.
Amortizable Capital Assets
Long-term assets whose cost is gradually expensed over their useful life, such as buildings and equipment.
Temporary Differences
Differences between the accounting value and tax value of assets and liabilities, resulting in deferred tax assets or liabilities.
- Comprehend the concept of temporary differences in accounting and their impact on deferred income taxes in a consolidation context.
- Understand the acquisition process related adjustments in the consolidated financial statements especially concerning amortizable capital assets and goodwill.
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Learning Objectives
- Comprehend the concept of temporary differences in accounting and their impact on deferred income taxes in a consolidation context.
- Understand the acquisition process related adjustments in the consolidated financial statements especially concerning amortizable capital assets and goodwill.
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