On January 1, 2020, ABC Corp. purchased 70,000 shares of the voting common stock of XYZ, Inc.
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Question:
On January 1, 2020, ABC Corp. purchased 70,000 shares of the voting common stock of XYZ, Inc.
During 2020, XYZ had the following information:
Reported earnings | $ 550,000 | |||||
Paid dividends | $ 380,000 | |||||
Common stock at $15 par value | $1,500,000 | |||||
Additional paid in capital - common stock | $ 680,000 | |||||
ABC assumes that all of XYZ's undistributed earnings will be distributed as dividends in future | ||||||
periods when the enacted tax rate will be | 46% | |||||
ABC's current enacted income tax rate is: | 40% | |||||
Prepare a journal entry to reflect the change in deferred tax for ABC as of 12/31/2020. Show work. | ||||||
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