Solution-What the income tax expense and income tax

What the income tax expense and income tax currently payable

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Question - On January 1, 2017, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years of 2017 and 2018 follows:

	2017	2018
Abbey Company:
Sales	$(823,000)	$(1,122,000)
Operating expenses	584,000	698,000
Intra-entity gross profits in ending inventory (included in above figures)	(202,000)	(234,000)
Dividend income -Benjamin Company	(18,000)	(36,000)
Benjamin Company:
Sales	(265,000)	(349,000)
Operating expenses	165,000	199,000
Dividends paid	(20,000)	(40,000)

Assume that a tax rate of 40 percent is applicable to both companies.

Required -

1. On consolidated financial statements for 2018, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group?

2. On consolidated financial statements for 2018, what are the income tax expense and income tax currently payable if they choose to file separate returns?

Reference no: EM132704514

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What the income tax expense and income tax currently payable

Reference no: EM132704514

Reference no: EM132704514

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