River Co. owns 80% of Boat Inc. The two companies file a consolidated income tax return and River uses the initial value method to account for the investment. The following information is available from the two companies' financial statements: River Co.Boat Inc.Separate operating income (excludes equity or dividend income from subsidiary)$600,000$120,000Net intra-entity gains on assets remaining in the consolidated entity in current year income (included in separate operating income above)50,00015,000Dividends received from Boat Inc. (not included in separate operating income above)24,000-0-Dividends paid110,00030,000?What is the amount of taxable income reported on the consolidated income tax return?
A. $655,000.
B. $621,000.
C. $665,000.
D. $720,000.
E. $625,000.
Answer: A
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