In the current year,Parent Corporation provided advertising services to its 100%-owned subsidiary,SubCo,under a contract that requires no payments to Parent until next year.Both parties use the accrual method of tax accounting and a calendar tax year.The services that Parent rendered were valued at $250,000.In addition,Parent received $20,000 of interest payments from SubCo. ,relative to an arm's length note between them.
Including these transactions,Parent's taxable income for the year amounted to $400,000.SubCo reported $200,000 separate taxable income.Derive the group's consolidated taxable income,using the format of Figure 8-2.

Question

Quizplus · Accepted Answer

The Answer of In the current year,Parent Corporation provided advertising services to its 100%-owned subsidiary,SubCo,under a contract that requires no payments to Parent until next year.Both parties use the accrual method of tax accounting and a calendar tax year.The services that Parent rendered were valued at $250,000.In addition,Parent received $20,000 of interest payments from SubCo. ,relative to an arm's length note between them.
Including these transactions,Parent's taxable income for the year amounted to $400,000.SubCo reported $200,000 separate taxable income.Derive the group's consolidated taxable income,using the format of Figure 8-2.

In the Current Year,Parent Corporation Provided Advertising Services to Its