Question
SB Portland Inc. (Portland) owns... Portland Inc. (Portland) owns 80% of Seattle Inc. (Seattle) and uses the cost method to account for its investment. The
SB Portland Inc. (Portland) owns...
Portland Inc. (Portland) owns 80% of Seattle Inc. (Seattle) and uses the cost method to account for its investment. The 2023 income statements of both companies are shown below.
Portland | Seattle | |
Gross profit | $100,000 | $50,000 |
Miscellaneous revenues (losses) | (30,000) | (20,000) |
Depreciation expense | (20,000) | (15,000) |
Income tax expense | (20,000 | (6,000) |
Net Income | $30,000 | $9,000 |
On January 1, 2023, Seattle acquired equipment for $7,000 and sold it the same day to Portland for $12,000. The equipment had a remaining useful life of 10 years on that date. Both companies are subject to an effective tax rate of 40%.
TB 07-17 Which of the following is the correct amount...
Which of the following is the correct amount of deferred taxes appearing on Portland's 2023 consolidated balance sheet?
Multiple Choice
$2,000
$2,700
$1,800
$1,140
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