In Castelvane's consolidated financial statements, the investment in its subsidiary has a carrying amount of 4,600,000 and a tax base of 3,400,000; the gap comes from undistributed profits. Castelvane controls the timing of reversal; it has decided on a distribution of 500,000 next year and plans nothing else in the foreseeable future. Under the tax law (data), the dividend received is taxed at 5%. Compute the difference, the deferred tax liability and the difference remaining with no liability.
- Consolidated carrying amount of the investment
- 4,600,000
- Tax base of the investment
- 3,400,000
- Distribution decided for next year
- 500,000
- Tax on the distribution in the parent (%)
- 5 %