The pretax accounting incomes of Pit Corporation and its 100 percent-owned subsidiary, Sol Company, for 2011 are as follows (in thousands):

The only intercompany transaction during 2011 was a gain on land sold to Sol. Assume a 34 percent flat income tax rate.REQUIRED1. What amount should be shown on the consolidated income statement as income tax expense if separate-company tax returns are filed?2. Compute the consolidated income tax expense if a consolidated tax return is filed.3. What will be the income taxes currently payable if separate income tax returns are filed? If a consolidated return isfiled?

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Pit Sol $1,000 $500 Sales Gain on land 200 Total revenue 1,200 500 500 Cost of sales Gross profit Operating expenses Pretax accounting income 300 700 200 400 100 $ 300 $100