A Company Had Taxable Income of $2 Million in Fiscal

question 19

Multiple Choice

A company had taxable income of $2 million in fiscal 2020 and paid taxes of 0.6 million; the company incurred a loss of $7 million in fiscal 2021 when the tax rate is 50%. How much refund is the company entitled to?

• A)Nil
• B)$0.6 million
• C)$1.0 million
• D)$3.5 million

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Definitions:

Consolidated Balance Sheet

A financial statement that shows the financial position of a parent company and its subsidiaries as if they were a single entity.

Treasury Stock Approach

A method in finance that accounts for repurchased shares of a company's own stock as treasury stock, reducing the total equity in the balance sheet.

Attributed Ownership

The assignment of ownership interest in a company or property, often for the purpose of determining control or tax responsibilities.

Intra-Entity Gain

A gain recognized when transactions occur within segments of the same company, not usually recognized for external reporting purposes until realized with an external party.