Senior, Ltd., acquires all of the stock of JuniorCo for $30,000,000 at the beginning of year 1. The group immediately elects to file income tax returns on a consolidated basis. Senior’s operations generate a $50,000,000 profit every year. In year 2, JuniorCo pays its parent a $9,000,000 dividend. Operating results for JuniorCo are as follows. Compute Senior’s basis in the JuniorCo stock as of the end of years 1, 2, and 3. All tax years occur after 2017. Tax Year Taxable Income 1 $ 4,000,000 2 12,000,000 3 15,000,000

On January 2, Year 1 Parent Company paid $1,200,000 for 100% of the voting common stock of Sub Corp. At the time of the investment, Sub Corp had net assets with a book value of $800,000 and fair value of $1,000,000. The fair value increase is attributable to the building and will be amortized over 10 years. During year 1, Sub earned net income of $100,000 and paid dividends of $20,000. Any excess cost over fair value is attributable to goodwill with an indefinite life. What is the amount of goodwill from Parent's investment in Sub? O $200,000 O $400,000 O $1,200,000 O $20,000 QUESTION 2 What is the balance in Parent's investment account at December 31, Year 1? O $1,260,000 O $1,200,000 O $1,340,000 O $1,280,000

(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.

On January 1, 2019, Spring Co. purchased a 25% interest in Fall Inc. for $500,000. For the year ended December 31, 2019, Fall reported net income from operations of $65,000 and a loss from discontinued operations of $10,000 (net of tax). Fall paid dividends of $11,500 on December 31, 2019. Assume that Spring uses the equity method to account for its investment in Fall. Which of the following is the amount that would be reported on Spring's 2019 income statement relating to Fall? Multiple Choice Investment income of $13,750. Dividend revenue of $2,875. Investment income of $16,250 and investment loss, discontinued operations of $2,500. Investment income of $13,750 and investment loss, discontinued operations of $2,500.

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?

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 $90,000

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During the current year, Swallow Corporation, a calendar year C corporation, has the following transactions: Income from operations $660,000 Expenses from operations 760,000 Dividends received from Brown Corporation 240,000 Click here to view the dividend received deduction table. Question Content Area a. Swallow Corporation owns 12% of Brown Corporation's stock. How much is Swallow's taxable income or NOL for the year? Swallow's taxable income after deducting the dividends received deduction is $fill in the blank fd6fd0f8303e049_2 . Feedback Area Feedback The purpose of the dividends received deduction is to mitigate multiple taxation of corporate income. Without the deduction, income paid to a corporation in the form of a dividend would be taxed to the recipient corporation with no corresponding deduction to the distributing corporation. Later, when the recipient corporation paid the income to its shareholders, the income would again be subject to taxation with no corresponding…

Acker Company bought 100% of Howell Company on 1/1/X1 for $1,440,000 and began applying the equity method. The book value of Howell's equity on that date was $1,440,000. In year X1, Howell reported net income of $100,000 and paid $40,000 in dividends. During year X1, Howell sold 1,000 units of inventory to Acker for $20,000 that had cost $10,000. On 12/31/X1, 400 of the units remained in Acker's inventory. How much investment income should Acker report in year X1

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