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 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:5
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
20x5
Operating Income
$ 100,000
in 20x5
$
40,000
50,000
30,000
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.
Income tax expense
Required A
Required B
Determine the amount of income tax expense that should be assigned to each company.
Daughter
Company
Polly
Corporation
$ 10,000
20,000
10,000
Sonny
Corporation
< Required A
Required B >
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