Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.This tax arises due to timing difference special when taxes are paid in advance. When there is overpayment of advance tax then deferred tax asset arises while opposite to it when there is underpayment of advance tax then deferred tax liability arises. The amount of deferred tax asset and deferred tax liability needed to prepare consolidated balance sheet.

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Chapter 10, Problem 10.10E

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Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.This tax arises due to timing difference special when taxes are paid in advance. When there is overpayment of advance tax then deferred tax asset arises while opposite to it when there is underpayment of advance tax then deferred tax liability arises.

The amount of deferred tax asset and deferred tax liability needed to prepare consolidated balance sheet.

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