On January 1, 2020, Abbey acquires 90 percent of Benjamin’s outstanding shares. Financial information for these two companies for the years 2020 and 2021 follows  (credit balances indicated by parentheses):       2020     2021   Abbey Company:             Sales $ (698,000 ) $ (1,000,000 ) Operating expenses   468,000     524,000   Intra-entity gross profits in ending inventory (included in above figures)   (159,000 )   (171,000 ) Dividend income—Benjamin Company   (9,000 )   (40,500 ) Benjamin Company:             Sales   (250,000 )   (289,000 ) Operating expenses   133,000     151,000   Dividends paid   (10,000 )   (45,000 )     Assume that a tax rate of 21 percent is applicable to both companies.   On consolidated financial statements for 2021, 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? On consolidated financial statements for 2021, what are the income tax expense and income tax currently payable if they choose to file separate returns? 1. Income tax expense: Income tax payable: 2. Income tax expense: Income tax payable:


On January 1, 2020, Abbey acquires 90 percent of Benjamin’s outstanding shares. Financial information for these two companies for the years 2020 and 2021 follows  (credit balances indicated by parentheses):

 

    2020     2021  
Abbey Company:            
Sales $ (698,000 ) $ (1,000,000 )
Operating expenses   468,000     524,000  
Intra-entity gross profits in ending inventory (included in above figures)   (159,000 )   (171,000 )
Dividend income—Benjamin Company   (9,000 )   (40,500 )
Benjamin Company:            
Sales   (250,000 )   (289,000 )
Operating expenses   133,000     151,000  
Dividends paid   (10,000 )   (45,000 )
 

 

Assume that a tax rate of 21 percent is applicable to both companies.

 

  1. On consolidated financial statements for 2021, 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?

  2. On consolidated financial statements for 2021, what are the income tax expense and income tax currently payable if they choose to file separate returns?

1. Income tax expense:

Income tax payable:

2. Income tax expense:

Income tax payable:

On January 1, 2020, Abbey acquires 90 percent of Benjamin’s outstanding shares. Financial information for these two companies for the years 2020 and 2021 follows  (credit balances indicated by parentheses):       2020     2021   Abbey Company:             Sales $ (698,000 ) $ (1,000,000 ) Operating expenses   468,000     524,000   Intra-entity gross profits in ending inventory (included in above figures)   (159,000 )   (171,000 ) Dividend income—Benjamin Company   (9,000 )   (40,500 ) Benjamin Company:             Sales   (250,000 )   (289,000 ) Operating expenses   133,000     151,000   Dividends paid   (10,000 )   (45,000 )     Assume that a tax rate of 21 percent is applicable to both companies.   On consolidated financial statements for 2021, 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? On consolidated financial statements for 2021, what are the income tax expense and income tax currently payable if they choose to file separate returns? 1. Income tax expense: Income tax payable: 2. Income tax expense: Income tax payable:


On January 1, 2020, Abbey acquires 90 percent of Benjamin’s outstanding shares. Financial information for these two companies for the years 2020 and 2021 follows  (credit balances indicated by parentheses):

 

    2020     2021  
Abbey Company:            
Sales $ (698,000 ) $ (1,000,000 )
Operating expenses   468,000     524,000  
Intra-entity gross profits in ending inventory (included in above figures)   (159,000 )   (171,000 )
Dividend income—Benjamin Company   (9,000 )   (40,500 )
Benjamin Company:            
Sales   (250,000 )   (289,000 )
Operating expenses   133,000     151,000  
Dividends paid   (10,000 )   (45,000 )
 

 

Assume that a tax rate of 21 percent is applicable to both companies.

 

  1. On consolidated financial statements for 2021, 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?

  2. On consolidated financial statements for 2021, what are the income tax expense and income tax currently payable if they choose to file separate returns?

1. Income tax expense:

Income tax payable:

2. Income tax expense:

Income tax payable:

Be the first to reply

Leave a Reply

Your email address will not be published.