Polly Corporation owns 80 percent of Sonny Corporation's stock and 90 percent of Daughter Company's stock. The companies file a consolidated tax return each year and in 20X5 paid a total tax of $80,000. Each company is involved in a number of intercompany Inventory transfers each period. Information on the companies' activities for 20X5 is as follows: Company Polly Corporation Sonny Corporation Daughter Company 20x4 Intercompany 20x5 Intercompany 20x5 Reported Profit Realized in Profit Not Realized Operating Income $ 100,000 in 20x5 10,000 20,000 10,000 50,000 30,000 Income tax expense 20x5 $ 40,000 20,000 Required: a. Determine the amount of income tax expense that should be assigned to each company. b. Compute consolidated net income and income to the controlling interest for 20X5. (Note: Polly Corporation does not record income tax expense on income from subsidiaries because a consolidated tax return is filed.) Complete this question by entering your answers in the tabs below. $ Required A Required B Determine the amount of income tax expense that should be assigned to each company. Daughter Company Polly Sonny Corporation Corporation. Required B >

Polly Corporation owns 80 percent of Sonny Corporation's stock and 90 percent of Daughter Company's stock. The companies file a consolidated tax return each year and in 20X5 paid a total tax of $80,000. Each company is involved in a number of intercompany Inventory transfers each period. Information on the companies' activities for 20X5 is as follows: Company Polly Corporation Sonny Corporation Daughter Company 20x4 Intercompany 20x5 Intercompany 20x5 Reported Profit Realized in Profit Not Realized Operating Income $ 100,000 in 20x5 10,000 20,000 10,000 50,000 30,000 Income tax expense 20x5 $ 40,000 20,000 Required: a. Determine the amount of income tax expense that should be assigned to each company. b. Compute consolidated net income and income to the controlling interest for 20X5. (Note: Polly Corporation does not record income tax expense on income from subsidiaries because a consolidated tax return is filed.) Complete this question by entering your answers in the tabs below. $ Required A Required B Determine the amount of income tax expense that should be assigned to each company. Daughter Company Polly Sonny Corporation Corporation. Required B >

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Paneer owns 30% of Lassi and has done so for many years. During the year ended 31 December 20X1, Lassi made a net profit of £1.5m. Lassi sold inventory costing £1m to Paneer at a mark-up of 50%. 40% of the goods are still in Paneer's inventory at the year end. What is the "Income from associates" to be shown in the consolidated Statement of profit or loss for the year ended 31 December 20X1? a. £1,300,000 b. £450,000 C. £360,000 d. £390,000 O e. £150,000 O f. £300,000 g. £250,000
Lauralee, Inc. owns a 30% interest in Eastwood Co., giving it representation on the investee’s board of directors. At the beginning of the year, the Equity Investment was carried on Lauralee’s balance sheet at $500,000. During the year, Eastwood reported net income of $250,000 and paid Lauralee a dividend of $50,000. In addition, Lauralee sold inventory to Eastwood, recording a gross profit of $20,000 on the sale. At the end of the year, 50% of the merchandise remained unsold by Eastwood. Required: a. Prepare the equity method journal entry to defer the unrealized inventory gross profit.b. How much equity income should Lauralee report from Eastwood during the year?c. What is the balance in the Equity Investment at the end of the year?
Par owns 88.01% of Sub Corp. Par sold depreciable assets to Sub on January 1, Year 3, at a before-tax gain of $38,361. On January 1, Year 4, Sub sold depreciable assets to Par at a before-tax gain of $76,723. Both assets are being depreciated over ten (10) years. The tax rate for both companies is 28.59%. How much after-tax intercompany gain or loss was realized during Year 4 from Sub's sale of assets to Par in Year 4? а. $5,618 b. $5,226 C. $5,487 d. $5,095 е. $5.357
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