Consolidated Return Scenario: Company P Purchased an 80% Interest in Company

question 2

Multiple Choice

Consolidated Return Scenario: Company P purchased an 80% interest in Company S on January 1, 20X3, for $800,000. On the purchase date, Company S stockholders' equity was $800,000. Any excess of cost over book value was attributed to a patent with a 10-year remaining life. In 20X3, Company P reported internally generated net income before taxes of $150,000. Company S reported a net income before taxes of $70,000. The firms file a consolidated tax return at a 30% tax rate.
-Refer to the Separate Return scenario. The tax applicable to Company S's income is

• A) $15,750
• B) $9,750
• C) $2,500
• D) $4,500

---

Definitions:

Aggressive

A behavior characterized by boldness or assertiveness, with a possible inclination to dominate or challenge others.

Personality Types

A method for categorizing individuals into specific groups based on their patterns of behavior, thoughts, and feelings.

Under Pressure

Experiencing stress or tension as a result of challenging circumstances or high demands.

Dimension of Personality

Fundamental traits or characteristics that make up an individual's personality, often used in psychology to analyze and understand human behavior.