Question
Pop Corp. owns 70% of the common shares of its subsidiary Soda Inc. During the current year, Pop charged Soda $5,000 per month for consulting
Pop Corp. owns 70% of the common shares of its subsidiary Soda Inc. During the current year, Pop charged Soda $5,000 per month for consulting fees. Soda charged Pop $27,000 for warehouse rent for the year. Pop and Soda reported total revenues of $150,000 and $120,000, respectively, on their separate entity statements of comprehensive income (SCI). Pop and Soda reported net income of $15,000 and $18,000, respectively, on their separate entity SCI. The tax rate for both companies is 40%. What amount would be reported for before-tax total operating expenses on the consolidated SCI, assuming no other intercompany transactions?
Question 4 options:
$128,000
$150,000
$183,000
$205,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started