Question

Thanks for your HELP!!!

46. Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?

A) sale of inventory from a subsidiary corporation to its parent corporation

B) accrual of rentals on a lease of real property owned by one group member that is used by another group member; both group members use the accrual method of accounting

C) cash dividend payment from a subsidiary corporation to its parent corporation

D) None of the above transactions require the deferral and later recognition of income.

49. Mohammed Corporation and Ali Corporation, an affiliated group, reports the following results for the current year:

Corporation	Ordinary Income	STCG/STCL	LTCG/LTCL
Mohammed Ali	$15,000 20,000	$8,000 (9,000)	($ 6,000) 12,000

What is the affiliated group's consolidated regular tax liability?

A) $4,000

B) $6,000

C) $6,500

D) $7,000

Answer 1

46. Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?

Ans: (A) sale of inventory from a subsidiary corporation to its parent.

corporation

Explanation:

(only a sales transaction between intercompany require deferral and later recongnition of income.hence (a) is correct. Cash and accrual basis transaction does not require deferral income therefore'rest all the options are incorrect)

49. What is the affiliated group's consolidated regular tax liability?

Ans: (A) $40,000

Explanation:

= ( $15000+$20,000) + ( 8000- 9000) + ( - 6000 + 12000)

= $35000 - 1000 + 6000

= $40000