Match each of the following items with the appropriate description, indicating whether the item's treatment for financial accounting and Federal income tax purposes is the same or not.
-Ownership level of parent at which a subsidiary can join the consolidated group.
A)Tax and book treatment is the same
B)Tax and book treatment differ

Question

Quizplus · Accepted Answer

For financial accounting purposes, a parent company can consolidate a subsidiary if it owns more than 50% of the subsidiary's voting stock. However, for federal income tax purposes, the ownership level required for a subsidiary to join a consolidated tax return group is at least 80%. Therefore, the treatment between book (financial accounting) and tax purposes differs.

Match Each of the Following Items with the Appropriate Description