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Alpha Company uses the owns a 30% investment in Bravo's common stock. During 2021, Bravo reported net earnings of $650,000 and paid dividends of
Alpha Company uses the owns a 30% investment in Bravo's common stock. During 2021, Bravo reported net earnings of $650,000 and paid dividends of $150,000. Assume that all the undistributed earnings of Bravo will be distributed as dividends in future periods. The dividends received from Bravo are eligible for the 80% dividends received deduction. Alpha's 2021, tax rate is 25%. In its December 31, 2021 tax entry related to this investment, Alpha will credit deferred income taxes liability by how much? $150,000 $7,500 $30,000 $9,000
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