River Co. owns 80% of Boat Inc. The two companies file a consolidated income tax return...
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 | $120,000 |
| Net intra-entity gains on assets remaining in the consolidated entity in current year income (included in separate operating income above) | 50,000 | 15,000 |
| Dividends received from Boat Inc. (not included in separate operating income above) | 24,000 | –0– |
| Dividends paid | 110,000 | 30,000 |
The amount of income tax expense that should be assigned to Boat using the separate return methodis approximately:
$31,500
$32,660
$32,750
$33,390
$36,000
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River Co. owns 80% of Boat Inc. The two companies file a
consolidated income tax return...
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