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Plumas, Inc., owns 85 percent of Santa Cruz Corporation. Both companies have been profitable for many years. During the current year, the parent sold for
Plumas, Inc., owns 85 percent of Santa Cruz Corporation. Both companies have been profitable for many years. During the current year, the parent sold for $198,500 merchandise costing $160,000 to the subsidiary, which still held 40 percent of this merchandise at the end of the year. Assume that the tax rate is 40 percent and that consolidated tax return were filed. What deferred income tax asset is created?
A) $0
B) $21,560
C) $4,960
D) $6,160
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