ParentCo Owned 100% of SubCo for the Entire Year, and Both

question 144

Multiple Choice

ParentCo owned 100% of SubCo for the entire year, and both companies use the accrual method of tax accounting. During the year, SubCo purchased $20,000 of supplies from ParentCo. In addition, SubCo provided internal audit services to ParentCo, which were worth $40,000. Including these transactions, ParentCo's separate taxable income was $75,000, and SubCo's separate taxable income was $100,000. What is the group's consolidated taxable income for the year?

• A) $215,000
• B) $195,000
• C) $175,000
• D) $155,000

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Definitions:

Autonomy Versus Shame

A stage in Erik Erikson's psychosocial development theory where toddlers learn to exercise will and do things independently, or doubt their abilities.

Healthy Family

A family system that functions in a supportive, loving, and constructive manner, promoting the well-being of all members.

Singular Style

Singular style refers to a unique or distinctive manner or way in which an individual expresses themselves or performs tasks, often characterizing their personal identity or creativity.

Open Ways

Approaches or methods that are accessible, transparent, and inclusive, allowing for participation and input from a broad audience.