Which of the Following Intercompany Transactions Creates Temporary Book/tax Differences

question 38

Multiple Choice

Which of the following intercompany transactions creates temporary book/tax differences when a parent corporation owns 100% of a subsidiary's stock and the companies file a consolidated return?

• A) intercompany sale
• B) undistributed subsidiary earnings
• C) intercompany dividends
• D) None of the above items create temporary differences.

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Definitions:

Straight Voting

Procedure where a shareholder may cast all votes for each member of the board of directors.

Cumulative Voting

A voting system used in corporate elections that allows shareholders to allocate their votes in any manner they choose, often used to strengthen the voting power of minority shareholders.

Dividend Growth Rate

Yearly percentage rate at which a company's dividend payments to its shareholders grow.

Investor's Return

The gain or loss an investor realizes on an investment, including dividends, interest, and capital gains.