Par Corporation and its 100 percent-owned subsidiary, Sam Corporation, are members of an affiliated group with pretax

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Par Corporation and its 100 percent-owned subsidiary, Sam Corporation, are members of an affiliated group with pretax accounting incomes as follows (in thousands):

Par Sam

Sales .................................... $4,800 .................. $2,800

Gain on sale of land ...................... 200 ....................... -

Cost of sales ........................... (2,400) .................. (1,200)

Operating expenses ................... (1,400) .................. (1,000)

Pretax accounting income ............ $1,200 .................... $ 600

The gain reported by Par relates to land sold to Sam during the current year. A flat 34 percent income tax rate is applicable. The land remains unsold at year-end.

REQUIRED

Prepare income statements for Par Corporation assuming

(a) That separate income tax returns are filed and

(b) That a consolidated income tax return is filed.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 978-0133451863

12th edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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