On January 1, 2017, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two
Question:
On January 1, 2017, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years of 2017 and 2018 follows
2017 2018
Abbey Company:
Sales 684000 1004000
Operating Expenses 462000 516000
Intra-entity gross profits in ending inventory (included in above figures):
(213000) (247000)
Dividend Income - Benjamin Co (13500) (31500)
Benjamin Company:
Sales (307000) (361000)
Operating Expenses 162000 209000
Dividends paid (15000) (35000)
Assume that a tax rate of 40 percent is applicable to both companies.
Required
- On consolidated financial statements for 2018, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group?
- On consolidated financial statements for 2018, what are the income tax expense and income tax currently payable if they choose to file separate returns?
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni