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.
-Parent owns 100% of a Brazil corporation and wants the entity to join the consolidated group.
A)Tax and book treatment is the same
B)Tax and book treatment differ

Question

Quizplus · Accepted Answer

For Federal income tax purposes, a foreign corporation generally cannot join a U.S. consolidated tax return group. However, for financial accounting purposes, if a U.S. parent company owns 100% of a foreign subsidiary, it typically consolidates the financial statements of that subsidiary with its own. Therefore, the tax and book treatments differ in this scenario.

Match Each of the Following Items with the Appropriate Description