What Are Some of the Advantages and Disadvantages of Filing

question 44

Essay

What are some of the advantages and disadvantages of filing a consolidated return?
1) profits of one member of the group can be offset against losses of another member of the group;
2) capital gains of one member of the group can be offset against capital losses of another member of the group; and
3) profits or gains reported on intercompany transactions are deferred until a sale outside the group takes place.
Disadvantages include:

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Definitions:

Petty Cash Account

A small fund kept on hand for incidental cash expenses, maintained through a system of documenting each withdrawal and replenishment.

Fund Replenishing

The process of restoring the balance of a fund to its original level or to a desired level after it has been depleted.

Fund Shortages

A situation where the available financial resources are insufficient to cover the expected or required expenses.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.