Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period, the two companies individually reported the following income (exclusive of any investment income): Lake Boxwood Lake paid a $60,000 cash dividend during the current year and Boxwood distributed $14,000. Boxwood sells inventory to Lake each period. Intra-entity gross profits of $27,000 were present in Lake's beginning inventory for the current year, and its ending inventory carried $39,000 in intra-entity gross profits. View each of the following questions as an independent situation. The effective tax rate for both companies is 40 percent. $ 303,000 149,000 a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reported on a consolidated income statement for this period? (Round the intermediate calculations and final answers to the nearest dollar amount.) b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paid by these two companies for the current year? (Round the intermediate calculations and final answers to the nearest dollar amount.) c. If Lake owns a 90 percent interest in Boxwood and a consolidated tax return is filed, what amount of income tax expense would be reported on a consolidated income statement for the year? a. b. C. Total income tax expense Income tax payable-Lake Income tax payable Boxwood Total income tax payable Income tax expense $
Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period, the two companies individually reported the following income (exclusive of any investment income): Lake Boxwood Lake paid a $60,000 cash dividend during the current year and Boxwood distributed $14,000. Boxwood sells inventory to Lake each period. Intra-entity gross profits of $27,000 were present in Lake's beginning inventory for the current year, and its ending inventory carried $39,000 in intra-entity gross profits. View each of the following questions as an independent situation. The effective tax rate for both companies is 40 percent. $ 303,000 149,000 a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reported on a consolidated income statement for this period? (Round the intermediate calculations and final answers to the nearest dollar amount.) b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paid by these two companies for the current year? (Round the intermediate calculations and final answers to the nearest dollar amount.) c. If Lake owns a 90 percent interest in Boxwood and a consolidated tax return is filed, what amount of income tax expense would be reported on a consolidated income statement for the year? a. b. C. Total income tax expense Income tax payable-Lake Income tax payable Boxwood Total income tax payable Income tax expense $
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 18P
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Question
Transcribed Image Text:Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period, the two companies individually
reported the following income (exclusive of any investment income):
Lake
Boxwood
Lake paid a $60,000 cash dividend during the current year and Boxwood distributed $14,000.
Boxwood sells inventory to Lake each period. Intra-entity gross profits of $27,000 were present in Lake's beginning inventory for the
current year, and its ending inventory carried $39,000 in intra-entity gross profits.
View each of the following questions as an independent situation. The effective tax rate for both companies is 40 percent.
$ 303,000
149,000
a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reported on a consolidated income
statement for this period? (Round the intermediate calculations and final answers to the nearest dollar amount.)
b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paid by these two companies for the
current year? (Round the intermediate calculations and final answers to the nearest dollar amount.)
c. If Lake owns a 90 percent interest in Boxwood and a consolidated tax return is filed, what amount of income tax expense would be
reported on a consolidated income statement for the year?
a.
b.
C.
Total income tax expense
Income tax payable-Lake
Income tax payable-Boxwood
Total income tax payable
Income tax expense
$
0
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