Asked by Yanna Listana on May 22, 2024
Verified
For each of the following situations, select the best answer concerning accounting for income taxes in combinations:(A) May file a consolidated income tax return.(B) May not a file consolidated income tax return.(C) Must file a consolidated income tax return.Parent company owns 85% of the voting stock of the subsidiary, and there are significant intra-entity transfers.Subsidiary is a foreign corporation.Parent company owns 90% of the voting stock of the subsidiary, but there are no intra-entity transfers of inventory.Parent company owns 75% of the voting stock of the subsidiary but there are no intra-entity transfers of inventory.Parent company owns 90% of the voting stock of the subsidiary, and there are intra-entity transfers of inventory.Parent company owns 75% of the voting stock of the subsidiary and there are intra-entity transfers of inventory.
Consolidated Income Tax Return
A single income tax return filed by a parent company and its subsidiaries, considered as one entity for tax purposes.
Intra-entity Transfers
Transfers of goods, services, or assets between divisions or units within the same company.
Voting Stock
Shares that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.
- Recognize the prerequisites for the submission of joint income tax returns between entities.
- Assess the relationship between the percentage of company ownership and the possibility of filing joint income tax returns.
- Contrast the accounting techniques applied by entities engaging in intra-entity inventory transfers with those that do not.
Verified Answer
MO
Learning Objectives
- Recognize the prerequisites for the submission of joint income tax returns between entities.
- Assess the relationship between the percentage of company ownership and the possibility of filing joint income tax returns.
- Contrast the accounting techniques applied by entities engaging in intra-entity inventory transfers with those that do not.