ADVANCED ACCOUNTING-LL
13th Edition
ISBN: 9781260232486
Author: Hoyle
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 7, Problem 20P
Clarke has a controlling interest in Rogers’s outstanding stock. At the current year-end, the following information has been accumulated for these two companies:
| Separate Operating Income | Dividends Paid | |
| Clarke | $500,000 (includes a $90,000 net gross profit in intra-entity ending inventory) |
$90,000 |
| Rogers | 240,000 | 80,000 |
Clarke uses the initial value method to account for the investment in Rogers. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 40 percent.
- a. Assume that Clarke owns 100 percent of Rogers's voting stock and is filing a consolidated tax return. What income tax amount does this affiliated group pay for the current period?
- b. Assume that Clarke owns 92 percent of Rogers’s voting stock and is filing a consolidated tax return. What amount of income taxes does this affiliated group pay for the current period?
- c. Assume that Clarke owns 80 percent of Rogers’s voting stock, but the companies elect to file separate tax returns. What is the total amount of income taxes that these two companies pay for the current period?
- d. Assume that Clarke owns 70 percent of Rogers’s voting stock, requiring separate tax returns. What is the total amount of income tax expense to be recognized in the consolidated income statement for the current period?
- e. Assume that Clarke owns 70 percent of Rogers’s voting stock so that separate tax returns are required. What amount of income taxes does Clarke have to pay for the current year?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Martin has a controlling interest in Rowen's outstanding stock. At the current year-end, the following information has been accumulated for these two companies:
Separate Operating Income
Dividends Paid
Martin
$697,500
$115,000
(includes a $170,000 net gross profit in intra-entity ending inventory)
Rowen
340,000
85,000
Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21 percent.
Assume that Martin owns 100 percent of Rowen's voting stock and is filing a consolidated tax return. What income tax amount does this affiliated group pay for the current period?
Assume that Martin owns 92 percent of Rowen's voting stock and is filing a consolidated tax return. What amount of income taxes does this affiliated group pay for the current period?
Assume that Martin owns 65 percent of…
Martin has a controlling interest in Rowen's outstanding stock. At the current year-end, the following information has
been accumulated for these two companies:
Separate Operating Income
$500,000
(includes a $90,000 net gross profit in intra-
entity ending inventory)
240,000
Dividends Paid
Martin
$90,000
Rowen
80,000
Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures
just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21
percent.
a. Assume that Martin owns 100 percent of Rowen's voting stock and is filing a consolidated tax return. What
income tax amount does this affiliated group pay for the current period?
b. Assume that Martin owns 92 percent of Rowen's voting stock and is filing a consolidated tax return. What amount
of income taxes does this affiliated group pay for the current period?
c. Assume that Martin owns 80 percent of Rowen's voting stock, but the…
Martin has a controlling interest in Rowen’s outstanding stock. At the current year-end, the following information has been accumulated for these two companies:
Separate Operating Income
Dividends Paid
Martin
$500,000
$90,000
(includes a $90,000 net gross profit in intra-entity ending inventory)
Rowen
240,000
80,000
Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21 percent.
Assume that Martin owns 70 percent of Rowen’s voting stock, requiring separate tax returns. What is the total amount of income tax expense to be recognized in the consolidated income statement for the current period? (Round your intermediate calculations and final answer to nearest whole dollar amount.)
Assume that Martin owns 70 percent of Rowen’s voting stock so that separate tax returns are required.…
Chapter 7 Solutions
ADVANCED ACCOUNTING-LL
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - How does the presence of an indirect ownership...Ch. 7 - Prob. 5QCh. 7 - In accounting for mutual ownerships, what is the...Ch. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10Q
Ch. 7 - Prob. 11QCh. 7 - Jones acquires Wilson, in part because the new...Ch. 7 - Prob. 13QCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Which of the following is correct for two...Ch. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - On January 1, 2016, Uncle Company purchased 80...Ch. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Clarke has a controlling interest in Rogerss...Ch. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 1DYSCh. 7 - Prob. 2DYS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Martin has a controlling interest in Rowen's outstanding stock. At the current year-end, the following information has been accumulated for these two companies: Separate Operating Income Dividends Paid Martin $540,000 $90,000 (includes a $189,000 net gross profit in intra-entity ending inventory) Rowen 380,000 80,000 Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21 percent. Assume that Martin owns 70 percent of Rowen's voting stock, requiring separate tax returns. What is the total amount of income tax expense to be recognized in the consolidated income statement for the current period? (Round your intermediate calculations and final answer to nearest whole dollar amount.) Assume that Martin owns 70 percent of Rowen's voting stock so that separate tax returns are required.…arrow_forwardClarke has a controlling interest in Rogers’s outstanding stock. At the current year-end, the following information has been accumulated for these two companies: Seperate operating income Dividends Paid Clarke $50000 (includes a $90000 net gross profit in intra entity ending inventory) $90000 Rogers 24000 80000 Clarke uses the initial value method to account for the investment in Rogers. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 40 percent.a. Assume that Clarke owns 100 percent of Rogers’s voting stock and is filing a consolidated tax return. What income tax amount does this affiliated group pay for the current period?b. Assume that Clarke owns 92 percent of Rogers’s voting stock and is filing a consolidated tax return. What amount of income taxes does this affiliated group pay for the current period?c. Assume that Clarke owns 80 percent of Rogers’s voting stock,…arrow_forwardGarrison holds a controlling interest in Robertson's outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison Robertson Separate operating income $ 300,000 $ 200,000 (includes $50,000 intra-entity gross profit in ending inventory) Dividends paid 32,000 50,000 Tax rate 21 % 21 % Garrison uses the initial value method to account for the investment in Robertson. Garrison's separate operating income figure does not include dividend income for the current year. Assume that Garrison owns 80 percent of Robertson's voting stock. On a consolidated tax return, what amount of income tax is paid? Assume that Garrison owns 80 percent of Robertson's voting stock. On separate tax returns, what total amount of income tax is paid? Assume that Garrison owns 70 percent of Robertson's voting stock. What total amount of income tax expense does a consolidated income statement…arrow_forward
- Garrison holds a controlling interest in Robertson's outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison Robertson Separate operating income $ 300,000 $ 200,000 (includes $50,000 intra-entity gross profit in ending inventory) Dividends paid 32,000 50,000 Tax rate 21 % 21 % Garrison uses the initial value method to account for the investment in Robertson. Garrison's separate operating income figure does not include dividend income for the current year. Assume that Garrison owns 70 percent of Robertson's voting stock. What total amount of income tax expense does a consolidated income statement recognize? (Round your intermediate calculations and final answer to nearest whole dollar amount.)arrow_forwardGarrison holds a controlling interest in Robertson's outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison Robertson Separate operating income $ 300,000 $ 200,000 (includes $50,000 intra-entity gross profit in ending inventory) Dividends paid 32,000 50,000 Tax rate 21 % 21 % Garrison uses the initial value method to account for the investment in Robertson. Garrison's separate operating income figure does not include dividend income for the current year. Assume that Garrison owns 80 percent of Robertson's voting stock. On a consolidated tax return, what amount of income tax is paid? Assume that Garrison owns 80 percent of Robertson's voting stock. On separate tax returns, what total amount of income tax is paid? Assume that Garrison owns 70 percent of Robertson's voting stock. What total amount of income tax expense does a consolidated income statement…arrow_forwardGarrison holds a controlling interest in Robertson's outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison Robertson Separate operating income $ 300,000 $ 200,000 (includes $50,000 intra-entity gross profit in ending inventory) Dividends paid 32,000 50,000 Tax rate 21 % 21 % Garrison uses the initial value method to account for the investment in Robertson. Garrison's separate operating income figure does not include dividend income for the current year. Assume that Garrison owns 80 percent of Robertson's voting stock. On a consolidated tax return, what amount of income tax is paid? Assume that Garrison owns 80 percent of Robertson's voting stock. On separate tax returns, what total amount of income tax is paid? Assume that Garrison owns 70 percent of Robertson's voting stock. What total amount of income tax expense does a consolidated income statement…arrow_forward
- Garrison holds a controlling interest in Robertson's outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison Robertson Separate operating income $ 300,000 $ 200,000 (includes $50,000 intra-entity gross profit in ending inventory) Dividends paid 32,000 50,000 Tax rate 21 % 21 % Garrison uses the initial value method to account for the investment in Robertson. Garrison's separate operating income figure does not include dividend income for the current year. Assume that Garrison owns 80 percent of Robertson's voting stock. On a consolidated tax return, what amount of income tax is paid? Assume that Garrison owns 80 percent of Robertson's voting stock. On separate tax returns, what total amount of income tax is paid? Assume that Garrison owns 70 percent of Robertson's voting stock. What total amount of income tax expense does a consolidated income statement…arrow_forwardMartin has a controlling interest in Rowen's outstanding stock. At the current year-end, the following information has been accumulated for these two companies: Martin Rowen Separate Operating Income $630,000 (includes a $125,000 net gross profit in intra-entity. ending inventory) 480,000 e Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21 percent. a b. C d a. Assume that Martin owns 100 percent of Rowen's voting stock and is filling a consolidated tax return. What income tax amount does this affiliated group pay for the current period? b. Assume that Martin owns 92 percent of Rowen's voting stock and is filing a consolidated tax return. What amount of income taxes does this affiliated group pay for the current period? c. Assume that Martin owns 80 percent of Rowen's voting stock, but the companies elect to…arrow_forwardMartin has a controlling interest in Rowen’s outstanding stock. At the current year-end, the following information has been accumulated for these two companies: Separate Operating Income Dividends Paid Martin $500,000 $90,000 (includes a $90,000 net gross profit in intra-entity ending inventory) Rowen 240,000arrow_forward
- Bean Corporation purchased 35% of the outstanding shares of common stock of Williams Corporation as a long-term investment. Subsequently, Williams Corporation reported net income. What journal entry would Bean Corporation use to record its share of the earnings of Williams Corporation? debit Cash: credit Dividend Revenue debit Investment in Williams Corporation Stock: credit Cash debit Cash: credit Investment in Williams Corporation debit Investment in Williams Corporation; credit Income of Williams Corporationarrow_forwardCrane and Loon Corporations, two unrelated C corporations, have the following transactions for the current year. Gross income from operations Expenses from operations Dividends received from domestic corporations (15% ownership) Crane Loon $193,500 $309,600 270,900 325,080 116,100 232,200 Click here to access the dividends received deduction table. a. Compute the dividends received deduction for Crane Corporation. $ b. Compute the dividends received deduction for Loon Corporation. $arrow_forwardGarrison holds a controlling interest in Robertson’s outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison RobertsonSeparate $300,000 $200,000operating income (includes $50,000 intra-entity gross profit in ending inventory)Dividends paid ...32,000 50,000Tax rate . . . . . . . . . 40% 40% Garrison uses the initial value method to account for the investment in Robertson. Garrison’s separate operating income figure does not include dividend income for the current year.a. Assume that Garrison owns 80 percent of Robertson’s voting stock. On a consolidated tax return, what amount of income tax is paid?b. Assume that Garrison owns 80 percent of Robertson’s voting stock. On separate tax returns, what total amount of income tax is paid?c. Assume that Garrison owns 70 percent of Robertson’s voting stock. What total amount of income…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Understanding U.S. Taxes; Author: Bechtel International Center/Stanford University;https://www.youtube.com/watch?v=QFrw0y08Oto;License: Standard Youtube License