On January 1, 2023, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years 2023 and 2024 follows (credit balances indicated by parentheses): Items Abbey Company: Sales Operating expenses Intra-entity gross profits in ending inventory (included in above figures) Dividend income-Benjamin Company Benjamin Company: Sales 2023 a. Income tax expense a. Income tax payable b. Income tax expense b. Income tax payable $ (785,000) $ (1,042,000) 536,000 662,000 (148,000) (22,500) Operating expenses Dividends paid Assume that a tax rate of 21 percent is applicable to both companies. Amount (330,000) 167,000 (25,000) 2024 (168,000) (27,000) Required: a. On consolidated financial statements for 2024, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group? (335,000) 206,000 (30,000) b. On consolidated financial statements for 2024, what are the income tax expense and income tax currently payable if they choose to file separate returns?
On January 1, 2023, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years 2023 and 2024 follows (credit balances indicated by parentheses): Items Abbey Company: Sales Operating expenses Intra-entity gross profits in ending inventory (included in above figures) Dividend income-Benjamin Company Benjamin Company: Sales 2023 a. Income tax expense a. Income tax payable b. Income tax expense b. Income tax payable $ (785,000) $ (1,042,000) 536,000 662,000 (148,000) (22,500) Operating expenses Dividends paid Assume that a tax rate of 21 percent is applicable to both companies. Amount (330,000) 167,000 (25,000) 2024 (168,000) (27,000) Required: a. On consolidated financial statements for 2024, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group? (335,000) 206,000 (30,000) b. On consolidated financial statements for 2024, what are the income tax expense and income tax currently payable if they choose to file separate returns?
Chapter11: The Corporate Income Tax
Section: Chapter Questions
Problem 5P: Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of...
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