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 a. Income tax expense a. Income tax payable b. Income tax expense b. Income tax payable

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 a. Income tax expense a. Income tax payable b. Income tax expense b. Income tax payable

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 3P: Income Statement, Lower Portion Cunningham Company reports a retained earnings balance of 365,200 at...

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Income Statement, Lower Portion Cunningham Company reports a retained earnings balance of 365,200 at the beginning of 2019. For the year ended December 31, 2019, the company reports pretax income from continuing operations of 150,500. The following information is also available pertaining to 2019: 1. The company declared and paid a 0.72 cash dividend per share on the 30,000 shares of common stock that were outstanding the entire year. 2. The company incurred a pretax 21,000 loss as a result of an earthquake, which is not unusual for the area. This is included in the 150,500 income from continuing operations. 3. The company sold Division P (a component of the company) in May. From January through May, Division P had incurred a pretax loss from operations of 33,000. A pretax gain of 15,000 was recognized on the sale of Division P. Required: Assuming that all the pretax items are subject to a 30% income tax rate: 1. Complete the lower portion of Cunningham's 2019 income statement beginning with Pretax Income from Continuing Operations. Include any related note to the financial statements. 2. Prepare an accompanying retained earnings statement.
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 2023 2024 Abbey Company: Sales Operating expenses Intra-entity gross profits in ending inventory (included in above figures) Dividend income-Benjamin Company Benjamin Company: Sales Operating expenses Dividends paid $ (790,000) $ (1,010,000) 508,000 632,000 (149,000) (159,000) (18,000) (36,000) (327,000) (352,000) 205,000 221,000 (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 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? a.…
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 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 $ (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…
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…
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