Parent and Subsidiary Corporations Have Filed Calendar-Year Consolidated Tax Returns

question 16

Multiple Choice

Parent and Subsidiary Corporations have filed calendar-year consolidated tax returns for several years. Parent Corporation uses the cash method of accounting while Subsidiary Corporation uses the accrual method of accounting. If Parent lends Subsidiary money

• A)the interest expense is deductible when accrued.
• B)the interest expense and interest income may be reported in different consolidated return years.
• C)the interest income is reported when the interest expense is accrued by Subsidiary.
• D)the interest expense deduction is taken when Parent reports the interest income.

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Definitions:

HR Policy

Guidelines and rules set by a company to manage its workforce and to regulate aspects such as recruitment, compensation, and employee relations.

Just Cause Contract

An employment agreement which specifies that an employee can only be terminated for specified, justifiable reasons.

Essential Duties

Fundamental tasks and responsibilities that are critical for the successful performance of a job.

Job Description

A formal document that outlines the duties, responsibilities, required qualifications, and reporting relationships of a specific job.