Tower Company owns 85% of Hill Company. The two companies engaged in several intra-entity transactions. There were no excess fair-value amortization amounts to account for. Each company's income before income tax and dividend income for the current time period follow, as well as the effects of intra-entity gross profits on remaining inventory which are included in the separate net income amounts. No income tax accruals have been recognized within these totals. The tax rate for each company is 30%. Tower CompanyHill CompanySeparate income before income tax (excluding equity or dividend income from Hill)$200,000$80,000Intra-entity gross profit on remaining inventory (included in income above)25,00010,000Dividend income from Hill10,200 Dividends declared15,00012,000?Using the percentage
allocation method for assigning income tax expense, the income tax expense assigned to Hill is closest to:
A. $0.
B. $21,000.
C. $17,400.
D. $24,000.
E. $20,400.
Answer: B
You might also like to view...
Which statement is true about using factor analysis to create spatial maps?
A) By factor analyzing the data obtained using attribute-based approaches, one could derive, for each respondent, n factor scores for each factor, one for each brand. B) The dimensions would be labeled by examining the eigenvalues. C) Discriminant weights can be used to label the dimensions. D) Both A and B are correct.
A ______ strategy means an organization is growing aggressively in its existing line(s) of business.
a. integration b. diversification c. concentration d. stability
If a conversion category is used, rather than the traditional labor and overhead categories, overhead may be applied using activity based costing
Indicate whether the statement is true or false
Today, social media are almost universally accepted as a way of doing business
Indicate whether the statement is true or false