Palmer Company Owns a 25% Interest in Sad,incorporated,a Domestic Company.sad
Palmer Company owns a 25% interest in Sad,Incorporated,a domestic company.Sad had net income of $60,000 and paid dividends of $20,000.Palmer's tax rate is 35%.For simplicity,assume that Sad's undistributed earnings are Palmer's only temporary timing difference.Assume Sad qualifies for the 80% dividend received deduction.Which of the following statements is correct?
A)The current tax liability is $700.
B)The current tax liability is $1,050.
C)Under GAAP,Palmer provides for income taxes on Sad's undistributed earnings with a credit to deferred tax liability of $700.
D)Under GAAP,Palmer provides for income taxes on Sad's undistributed earnings with a credit to deferred tax liability of $1,050.
Palmquist Corporation and its 80%-owned subsidiary,Sadler Corporation,are members of an affiliated group.They do not file consolidated tax returns.Sadler had $3,000,000 of income and paid $1,000,000 dividends in 2014.Palmquist and Sadler had 35% income tax rates.What amount of Sadler's dividends is taxable to Palmquist in 2014?
Palomba Corporation allocates consolidated income taxes to its 90%-owned subsidiary using the percentage allocation method.Under this method,consolidated income tax expense will be allocated to a subsidiary
A)on the basis of the agreement between the parent and subsidiary.
B)on the basis of the subsidiary's pretax income as a percentage of consolidated pretax income.
C)on the basis of the income taxes remitted to the IRS.
D)90% to the subsidiary.
Saito Corporation's stockholders' equity on December 31,2014 was as follows:
On January 1,2015,Panata Corporation paid $300,000 for a 70% interest in Saito's common stock.On January 1,2015,the book values of Saito's assets and liabilities were equal to fair values.
1.Determine the book value of the common stockholders' equity for Saito Corporation on January 1,2015.
2.What is the amount of goodwill reported on the consolidated balance sheet for Panata Corporation (and Subsidiary)at January 2,2015?
3.What is the noncontrolling interest that appeared on a consolidated balance sheet for Panata Corporation (and Subsidiary)on January 2,2015?