_____ A parent and its subsidiary file a consolidated income tax return. The subsidiary issues separate financial statements. The subsidiary's income statement
A) Need not include income tax expense.
B) May include income tax expense calculated as if the subsidiary had filed a separate income tax return.
C) May include income tax expense allocated on an arbitrary and reasonable basis by the parent.
D) Both b and c.
E) None of the above.

Question

Quizplus · Accepted Answer

The subsidiary's income statement may include income tax expense calculated as if it had filed a separate income tax return (B) or it may include income tax expense allocated on an arbitrary and reasonable basis by the parent (C). This allows for flexibility in financial reporting while ensuring that the financial statements reflect some measure of tax expense.

_____ a Parent and Its Subsidiary File a Consolidated Income