P and S Corporations have filed consolidated tax returns for several years. The group had no...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
P and S Corporations have filed consolidated tax returns for several years. The group had no intercompany inventory sales before the current year (Year 1). P and S use the first-in, first-out (FIFO) inventory method. View the additional information. Requirement What is the group's consolidated taxable income for each of Years 1, 2, and 3? Compute the group's consolidated taxable income for Years 1, 2, and 3 using the worksheet format. (Use a parentheses or minus sign for any adjustments and eliminations reducing the consolidated taxable income.) Consolidated Adjustments and S's separate taxable income eliminations reporting P's separate reporting Year 1 Additional Information - During Year 1, S sells 35,000 widgets to P, earning $5 per unit profit on the sale. Also during Year 1, P sells 28,900 of these widgets to third parties for an additional $4 per unit profit. Thus, P's inventory at the end of Year 1 includes 6,100 of unsold widgets. During Year 2, S sells 95,000 widgets to P, earning $13 per unit profit on the sale. Also during Year 2, P sells to third parties 80,500 of these widgets and also sells the 6,100 widgets from beginning inventory, all for an additional $4 per unit profit. Thus, P's inventory at the end of Year 2 includes 14,500 widgets P purchased from S in Year 2. No intercompany inventory sales occur in Year 3. However, during Year 3, P sells all widgets in beginning inventory for an additional $5 per unit profit. In addition to these intercompany transactions, P incurs a $20,000 loss and S earns $400,000 of profit in each year from other business activities. P and S Corporations have filed consolidated tax returns for several years. The group had no intercompany inventory sales before the current year (Year 1). P and S use the first-in, first-out (FIFO) inventory method. View the additional information. Requirement What is the group's consolidated taxable income for each of Years 1, 2, and 3? Compute the group's consolidated taxable income for Years 1, 2, and 3 using the worksheet format. (Use a parentheses or minus sign for any adjustments and eliminations reducing the consolidated taxable income.) Consolidated Adjustments and S's separate taxable income eliminations reporting P's separate reporting Year 1 Additional Information - During Year 1, S sells 35,000 widgets to P, earning $5 per unit profit on the sale. Also during Year 1, P sells 28,900 of these widgets to third parties for an additional $4 per unit profit. Thus, P's inventory at the end of Year 1 includes 6,100 of unsold widgets. During Year 2, S sells 95,000 widgets to P, earning $13 per unit profit on the sale. Also during Year 2, P sells to third parties 80,500 of these widgets and also sells the 6,100 widgets from beginning inventory, all for an additional $4 per unit profit. Thus, P's inventory at the end of Year 2 includes 14,500 widgets P purchased from S in Year 2. No intercompany inventory sales occur in Year 3. However, during Year 3, P sells all widgets in beginning inventory for an additional $5 per unit profit. In addition to these intercompany transactions, P incurs a $20,000 loss and S earns $400,000 of profit in each year from other business activities.
Expert Answer:
Answer rating: 100% (QA)
The groups consolidated taxable income for each of Years 1 2 and 3 can be calculated as follows ... View the full answer
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date:
Students also viewed these accounting questions
-
P and S Corporations have filed consolidated tax returns for several years. The group had no intercompany inventory sales before the current year (Year 1). P and S use the first-in, first-out (FIFO)...
-
P and S Corporations have filed consolidated tax returns for several years. In the current year (Year 1), P began selling inventory items to S. P and S use the first-in, first-out (FIFO) inventory...
-
Determine the real roots of (x) = - 1 + 5.5x 4x2 + 0.5x3: (a) Graphically and (b) Using the Newton-Raphson method to within s = 0.01%.
-
Find the dimensions of a rectangle with a perimeter of 76 feet that has the maximum area.
-
Exploring the philosophical dimensions of genre theory, how do conceptual frameworks such as ontological pluralism and structuralism inform our understanding of genre as a dynamic and contingent...
-
In addition to the quantitative variable pesticide concentration, the researchers also report whether or not the pesticide was detected in the urine (at standard detection levels). Before the...
-
Apple and Samsung are competitors in the global marketplace. Apple's and Samsung's financial statements are in Appendix A. Required 1. Determine the change in Apple's and Samsung's inventories for...
-
Last year, Dixon Company produced 11,000 units and sold 9,000 units. The company had no beginning inventory Dixon incurred the following costs: Direct materials per unit Direct labor per unit...
-
The easiest and most commonly used technique for analyzing risks is _____ analysis. ImpactRisk/rewardPaybackScenario
-
Mary Kay Morrow began working for Hallmark in 1982. At the beginning of 2002, Hallmark adopted the Hallmark Dispute Resolution Program, which required, among other things, that claims against the...
-
On April 4, 2014, Athanasios Valsamis lost his appeal to get his money back from a friend to whom he had loaned \($700,000.\) As you will read, this case underscores the consequence of failing to...
-
In spring 1989, Michael Jordan and the Chicago Bulls were in Indianapolis, Indiana, to play against the Indiana Pacers. At the same time, Karla Knafel was singing with a band at a hotel in...
-
A significant issue when a contract is breached is whether the cause of action is strictly in breach of contract or may be expanded to negligence and strict liability. The significance comes into...
-
A Pepsi promotion encouraged consumers to collect Pepsi points and redeem them for merchandise. If they did not have quite enough points for the prize they wanted, they could buy additional points...
-
The following are the classes of transactions and the titles of the journals used for Phillips Equipment Rental Co. Purchases Returns, Rental revenue, Charge-off of uncollectible accounts,...
-
The Adjusted Trial Balance columns of a 10-column work sheet for Webber Co. follow. Complete the work sheet by extending the account balances into the appropriate financial statement columns and by...
-
Taxes are paid each year on some measure of financial gain. We typically think of financial gain as cash inflows minus cash outflows, and yet simply subtracting outflows due to capital investments in...
-
True or False: The Modified Accelerated Cost Recovery System is the most popular depreciation method used in computing corporate income tax liabilities.
-
A lumber company purchases and installs a wood chipper for \(\$ 200,000\). The chipper is classified as MACRS 7-year property. Its useful life is 10 years. The estimated salvage value at the end of...
Study smarter with the SolutionInn App