Paloma, Inc., owns 90 percent of Blanca Corporation. Both companies have been profitable for many years. During the current year, the parent sold merchandise to the subsidiary at a transfer price of $194,000. In recording the transfer, the parent recognized cost of goods sold of $139,000. At the end of the year, the subsidiary still held 40 percent of this merchandise in its inventory. Assume that the tax rate is 21 percent. What deferred income tax asset amount is created if a consolidated tax return were filed?
Paloma, Inc., owns 90 percent of Blanca Corporation. Both companies have been profitable for many years. During the current year, the parent sold merchandise to the subsidiary at a transfer price of $194,000. In recording the transfer, the parent recognized cost of goods sold of $139,000. At the end of the year, the subsidiary still held 40 percent of this merchandise in its inventory. Assume that the tax rate is 21 percent. What deferred income tax asset amount is created if a consolidated tax return were filed?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Paloma, Inc., owns 90 percent of Blanca Corporation. Both companies have been profitable for many years. During the current year, the parent sold merchandise to the subsidiary at a transfer price of $194,000. In recording the transfer, the parent recognized cost of goods sold of $139,000. At the end of the year, the subsidiary still held 40 percent of this merchandise in its inventory. Assume that the tax rate is 21 percent. What
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