ParentCo and SubCo had the following items of income and deduction for the current year. Compute ParentCo and SubCo's consolidated taxable income or loss.
A) $81,000.
B) $88,000.
C) $90,000.
D) $90,500.

Question

ParentCo and SubCo had the following items of income and deduction for the current year.  Compute ParentCo and SubCo's consolidated taxable income or loss.
A) $81,000. 
B) $88,000. 
C) $90,000. 
D) $90,500.

Quizplus · Accepted Answer

ParentCo and SubCo's consolidated taxable income or loss can be determined as follows:

Total parent taxable income: 
$60,000 + $10,000 - $5,000 = $65,000

Total subsidiary taxable income: 
$40,000 + $15,000 - $10,000 - $2,000 = $43,000

Consolidated taxable income: 
$65,000 + $43,000 = $108,000

Less: Intercompany dividends: 
$18,000

Consolidated taxable income or loss: 
$90,000 (Option C)

ParentCo and SubCo Had the Following Items of Income and Deduction