On January 1, 2023, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies forthe years 2023 and 2024 follows (credit balances indicated by parentheses):ItemsAbbey Company:SalesOperating expensesIntra-entity gross profits in ending inventory(included in above figures)Dividend income-Benjamin CompanyBenjamin Company:Salesa. Income tax expensea. Income tax payableb. Income tax expenseb. Income tax payable2023Amount$ (785,000) $ (1,042,000)536,000662,000(148,000)(22,500)2024(330,000)167,000(25,000)(168,000)(27,000)Operating expensesDividends paidAssume that a tax rate of 21 percent is applicable to both companies.Required:a. On consolidated financial statements for 2024, what are the income tax expense and the income tax currently payable if Abbey andBenjamin file a consolidated tax return as an affiliated group?b. On consolidated financial statements for 2024, what are the income tax expense and income tax currently payable if they choose tofile separate returns?(335,000)206,000(30,000)

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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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
a. Income tax expense
a. Income tax payable
b. Income tax expense
b. Income tax payable
2023
Amount
$ (785,000) $ (1,042,000)
536,000
662,000
(148,000)
(22,500)
2024
(330,000)
167,000
(25,000)
(168,000)
(27,000)
Operating expenses
Dividends paid
Assume that a tax rate of 21 percent is applicable to both companies.
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?
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?
(335,000)
206,000
(30,000)

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