The dividends received from Rex are eligible for the 80% dividends-received deduction. • All the undistributed earnings of Rex will be distributed in future years. • There are no other temporary differences. • Bart's 20X5 income tax rate is 30%. • The enacted income tax rate after 20X5 is 25%.
The dividends received from Rex are eligible for the 80% dividends-received deduction. • All the undistributed earnings of Rex will be distributed in future years. • There are no other temporary differences. • Bart's 20X5 income tax rate is 30%. • The enacted income tax rate after 20X5 is 25%.
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 30P
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Question
Bart, Inc., a newly organized corporation, uses the equity method of accounting for its 30% investment in Rex Co.'s common stock. During 20X5, Rex paid dividends of $300,000 and reported earnings of $900,000. In addition:
• The dividends received from Rex are eligible for the 80% dividends-received deduction.
• All the undistributed earnings of Rex will be distributed in future years.
• There are no other temporary differences.
• Bart's 20X5 income tax rate is 30%.
• The enacted income tax rate after 20X5 is 25%.
In Bart's December 31, 20X5 balance sheet, the
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