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The Lucy Company owns 90% of the voting stock of the Desi Company voting stock. Lucy and Desi have not had inter-company transactions during the
The Lucy Company owns 90% of the voting stock of the Desi Company voting stock. Lucy and Desi have not had inter-company transactions during the year. Lucy accounts for its investment in Desi using the initial value (cost) method and Desi does not pay dividends. In 2023, Lucy reported income of $900,000 (unconsolidated) before taxes. While Desi reported income of $150,000 before taxes. The tax rate is 20% on the first $1,000,000 of income and 40% on income above $1,000,000.
Required: What are the 2 values Lucy can show for consolidated income?
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