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):Items20232024Abbey Company:SalesOperating expensesIntra-entity gross profits in ending inventory(included in above figures)Dividend income-Benjamin CompanyBenjamin Company:SalesOperating expensesDividends paid$ (790,000) $ (1,010,000)508,000632,000(149,000)(159,000)(18,000)(36,000)(327,000)(352,000)205,000221,000(20,000)(40,000)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 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?a. Income tax expensea. Income tax payableb. Income tax expenseb. Income tax payableAmount

Explanation of Income Tax Expense: This refers to the amount of tax calculated on a company's…

Answered: On January 1, 2023, Abbey acquires 90…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

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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Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of $160,000 for 2019. The corporation also has $30,000 in dividends from publicly traded domestic corporations in which the ownership percentage was 45 percent. Calculate the corporation's dividends received deduction for 2019. $_____________ Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $135,000. Calculate the corporation's dividends received deduction for 2019. $___________ Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $158,000. Calculate the corporation's dividends received deduction for 2019. $_____________
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…
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 2023 2024 Operating expenses $ (683,000) 446,000 $ (1,062,000) 594,000 Intra-entity gross profits in ending inventory (included in above figures) Dividend income Benjamin Company (169,000) (9,000) (237,000) (40,500) Benjamin Company: Sales Operating expenses (293,000) (359,000) Dividends paid 124,000 (10,000) 194,000 (45,000) 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? Amount…
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 2023 2024 Abbey Company: Sales $ (692,000) $ (1,098,000) Operating expenses 444,000 672,000 Intra-entity gross profits in ending inventory (included in above figures) (167,000) (186,000) Dividend income—Benjamin Company (9,000) (40,500) Benjamin Company: Sales (269,000) (351,000) Operating expenses 129,000 170,000 Dividends paid (10,000) (45,000) Assume that a tax rate of 21 percent is applicable to both companies. Required: 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? On consolidated financial statements for 2024, what are the income tax expense and income tax currently payable if they choose…
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 $ (860,000 ) $ (964,000 ) Operating expenses 572,000 636,000 Intra-entity gross profits in ending inventory (included in above figures) (193,000 ) (226,000 ) Dividend income—Benjamin Company (13,500 ) (31,500 ) Benjamin Company: Sales (263,000 ) (325,000 ) Operating expenses 158,000 164,000 Dividends paid (15,000 ) (35,000 ) 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…
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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: $ (500,000) $ (700,000) 300,000 Sales Operating expenses Intra-entity gross profits in ending inventory (included in above figures) Dividend income-Benjamin Company Benjamin Company: 400,000 (120,000) (18,000) (150,000) (36,000) (210,000) 130,000 (20,000) (270,000) 170,000 (40,000) Sales Operating expenses Dividends paid Assume that a tax rate of 21 percent is applicable to both companies. a. 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? b. On consolidated financial statements for 2021, what are the income tax expense and income tax currently payable if they choose to file separate returns?
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 $ (784,000 ) $ (890,000 ) Operating expenses 540,000 546,000 Intra-entity gross profits in ending inventory (included in above figures) (122,000 ) (235,000 ) Dividend income—Benjamin Company (9,000 ) (40,500 ) Benjamin Company: Sales (275,000 ) (284,000 ) Operating expenses 156,000 182,000 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…
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…
am. 122.
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A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…

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