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Arriba and its 80 percent-owned subsidiary (Abajo) reported the following figures for the year ending December 31, 2024 (credit balances indicated by parentheses). Abajo paid
Arriba and its 80 percent-owned subsidiary (Abajo) reported the following figures for the year ending December 31, 2024 (credit balances indicated by parentheses). Abajo paid dividends of $51,000 during this period. In 2023 , intra-entity gross profits of $51,000 on upstream transfers of $153,000 were deferred into 2024 . In 2024 intra-entity gross profits of $67,300 on upstream transfers of $185,600 were deferred into 2025 . Required: a. What amounts appear for each line in a consolidated income statement for the year ending December 31, 2024? b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 21 percent. Note: For all requirements, input all amounts as positive values
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