FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
Garrison holds a controlling interest in Robertson's outstanding stock. For the current year, the following information has been gathered about these two companies:
| Garrison | Robertson | |||||||
| Separate operating income | $ | 300,000 | $ | 200,000 | ||||
| (includes $50,000 intra-entity gross profit in ending inventory) | ||||||||
| Dividends paid | 32,000 | 50,000 | ||||||
| Tax rate | 21 | % | 21 | % | ||||
Garrison uses the initial value method to account for the investment in Robertson. Garrison's separate operating income figure does not include dividend income for the current year.
-
Assume that Garrison owns 80 percent of Robertson's voting stock. On a consolidated tax return, what amount of income tax is paid?
-
Assume that Garrison owns 80 percent of Robertson's voting stock. On separate tax returns, what total amount of income tax is paid?
-
Assume that Garrison owns 70 percent of Robertson's voting stock. What total amount of income tax expense does a consolidated income statement recognize? (Round your intermediate calculations and final answer to nearest whole dollar amount.)
-
Assume that Garrison holds 60 percent of Robertson's voting stock. On a separate income tax return, what amount of income tax does Garrison have to pay?
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- We own 35% of Smith corporation, please prepare journal entries for the following events under the appropriate method of accounting. Smith corporation has $100,000 of Net Income for the year. Smith distributes $50,000 to its shareholders in distributions. Our investment in the Smith corporation stock increased by $20,000 during the year.arrow_forwardDuring the current year, Elements Corporation has the following transactions: Income from operations $450,000 Expenses from operations 470,000 Dividends received fromR Corporation * 150,000 *Elements owns 10% of the stock in R Corporation. How much is Element Corporation’s taxable income (loss) for the year.arrow_forward(TCO A) Bend Inc. holds 25% of the outstanding voting shares of Calico Co. and appropriately applies the equity method of accounting. Amortization associated with this investment equals $9,000 per year. For 20X3, Calico reported earnings of $80,000 and paid cash dividends of $30,000. During 20X3, Calico acquired inventory for $57,600, which was then sold to Bend for $90,000. At the end of 20X3, Bend still held some of this inventory at its transfer price of $40,000.Required:(1) Determine the amount of intra-entity profit at the end of 20X3.(2) Determine the amount of Equity in Investee Income that Bend should have reported for 20X3.arrow_forward
- Sharon Slotten purchased shares in ATCO Ltd. during the current year as follows: Jan. 1: 200 shares for $25 per share April 2: 300 shares for $30 per share July 1: 100 shares sold for $45 per share Sept. 8: 500 shares for $24 per share On December 22, of the current year Sharon sells 200 ATCO Ltd. shares for $35 per share and pays $100 in sales commission. Required: Calculate the taxable capital gain or loss included in Sharon's NET INCOME under paragraph 3(b) of the Income Tax Act. Solution: Date No. of shares Cost per share Cost in Pool Jan.1 200 $ 25.00 $ 5,000 Apr.2 300 $ 30.00 $ 9,000 Subtotal 01-Jul 100 $ 45.00 $ 4,500 Sept.8 Total Calculation of Capital Gain: Proceeds of disposition Selling costs Adjusted cost base Capital Gain (loss) Capital Gains reserve Capital Gain Inclusion rate Taxable capital gain Total 01-Jul Dec.22 $ 200 $arrow_forwardGarrison holds a controlling interest in Robertson's outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison Robertson Separate operating income $ 300,000 $ 200,000 (includes $50,000 intra-entity gross profit in ending inventory) Dividends paid 32,000 50,000 Tax rate 21 % 21 % Garrison uses the initial value method to account for the investment in Robertson. Garrison's separate operating income figure does not include dividend income for the current year. Assume that Garrison owns 80 percent of Robertson's voting stock. On a consolidated tax return, what amount of income tax is paid? Assume that Garrison owns 80 percent of Robertson's voting stock. On separate tax returns, what total amount of income tax is paid? Assume that Garrison owns 70 percent of Robertson's voting stock. What total amount of income tax expense does a consolidated income statement…arrow_forwardMartin has a controlling interest in Rowen's outstanding stock. At the current year-end, the following information has been accumulated for these two companies: Separate Operating Income Dividends Paid Martin $697,500 $115,000 (includes a $170,000 net gross profit in intra-entity ending inventory) Rowen 340,000 85,000 Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21 percent. Assume that Martin owns 100 percent of Rowen's voting stock and is filing a consolidated tax return. What income tax amount does this affiliated group pay for the current period? Assume that Martin owns 92 percent of Rowen's voting stock and is filing a consolidated tax return. What amount of income taxes does this affiliated group pay for the current period? Assume that Martin owns 65 percent of…arrow_forward
- Martin has a controlling interest in Rowen's outstanding stock. At the current year-end, the following information has been accumulated for these two companies: Separate Operating Income Dividends Paid Martin $540,000 $90,000 (includes a $189,000 net gross profit in intra-entity ending inventory) Rowen 380,000 80,000 Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21 percent. Assume that Martin owns 100 percent of Rowen's voting stock and is filing a consolidated tax return. What income tax amount does this affiliated group pay for the current period? Assume that Martin owns 92 percent of Rowen's voting stock and is filing a consolidated tax return. What amount of income taxes does this affiliated group pay for the current period? Assume that Martin owns 65 percent of…arrow_forward21 )arrow_forwardLake acquired a controlling interest in Boxwood several years ago. During the current fiscal period,the two companies individually reported the following income (exclusive of any investmentincome): Lake $ 390,000 Boxwood $ 100,000 Lake paid a $55,000 cash dividend during the current year, and Boxwood distributed $5,000.Boxwood sells inventory to Lake each period. Intra-entity gross profits of $24,100 were present inLake's beginning inventory for the current year, and its ending inventory carried $38,100 in intraentity gross profits.View each of the following questions as an independent situation. The effective tax rate for bothcompanies is 21 percent.a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reportedon a consolidated income statement for this period? (Round the intermediate calculationsand final answers to the nearest dollar amount.)b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paidby…arrow_forward
- Green Corp. owns 30% of the outstanding common stock and 100% of the outstanding noncumulative nonvoting preferred stock of Axel Corp. In the current year, Axel declared dividends of $100,000 on its common stock and $60,000 on its preferred stock. Green exercises significant influence over Axel's operations. What amount of dividend revenue should Green report in its income statement for the current year ended December 31? A. $0 B. C. D. $30,000 $60,000 $90,000arrow_forwardGodoarrow_forwardNo work shown requiredarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education