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Gross Profit Miscellaneous Revenues/Losses Depreciation Expense Income Tax Expense Net Income Jay $100,000 $30,000 $20,000 $20,000 $30,000 Tesla $50,000 $20,000 $15,000 $ 6,000 $9,000 On January 1, 2020, Tesla sold equipment to Jay at a profit of $3,000. The equipment had

Gross Profit Miscellaneous Revenues/Losses Depreciation Expense Income Tax Expense Net Income Jay $100,000 $30,000 $20,000 $20,000 $30,000 Tesla $50,000 $20,000 $15,000 $ 6,000 $9,000 On January 1, 2020, Tesla sold equipment to Jay at a profit of $3,000. The equipment had

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jay Inc. owns 80% of Tesla Inc. and uses the cost method to account for its investment. The 2020 income statements of both companies are shown below. Gross Profit Miscellaneous Revenues/Losses Depreciation Expense Income Tax Expense Net Income Multiple Choice O O On January 1, 2020, Tesla sold equipment to Jay at a profit of $3,000. The equipment had a remaining useful life of twenty years on that date. Both companies are subject to an effective tax rate of 40%. The amount deferred taxes appearing on Jay's 2020 Consolidated Statement of Financial Position would be: OO nil. $1,000. $1,140. Jay $100,000 $30,000 $2,550. $20,000 $20,000 $30,000 Tesla $50,000 $20,000 $15,000 $ 6,000 $9,000
Transcribed Image Text:Jay Inc. owns 80% of Tesla Inc. and uses the cost method to account for its investment. The 2020 income statements of both companies are shown below. Gross Profit Miscellaneous Revenues/Losses Depreciation Expense Income Tax Expense Net Income Multiple Choice O O On January 1, 2020, Tesla sold equipment to Jay at a profit of $3,000. The equipment had a remaining useful life of twenty years on that date. Both companies are subject to an effective tax rate of 40%. The amount deferred taxes appearing on Jay's 2020 Consolidated Statement of Financial Position would be: OO nil. $1,000. $1,140. Jay $100,000 $30,000 $2,550. $20,000 $20,000 $30,000 Tesla $50,000 $20,000 $15,000 $ 6,000 $9,000
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