Calendar Year Parent Corporation Acquired All of the Stock of SubCo

question 70

Essay

Calendar year Parent Corporation acquired all of the stock of SubCo on January 1, year 1, for $500,000. The subsidiary's operating gains and losses are shown below. In addition, a $50,000 dividend is paid early in year 2.
Complete the following chart, indicating the appropriate stock basis and excess loss account amounts. $$\begin{array} { l c c c } \text { Year } & \begin{array} { c } \text { Operating } \\\text { Gain/Loss }\end{array} & \begin{array} { c } \text { Stock } \\\text { Basis }\end{array} & \begin{array} { c } \text { Excess } \\\text { Loss } \\\text { Account }\end{array} \\1 & ( \$ 100,000 ) & ? & ? \\2 & ( \$ 150,000 ) & ? & ? \\3 & \$ 300,000 & ? & ?\end{array}$$

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Definitions:

Central Deafness

A type of hearing loss which is caused by damage to the central nervous system rather than the ear itself.

Taste Receptor Cells

Specialized cells located on the taste buds of the tongue that detect chemical substances in food, allowing the perception of taste.

Papillae

Small protrusions on the surface of the tongue that contain taste buds and aid in the sensation of taste.

Taste Buds

Structures along the sides of many of the tongue’s papillae that are composed of 60 to 100 receptor cells for taste.