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:

Acrosomal Enzymes

Enzymes contained in the acrosome of a sperm cell, which help the sperm penetrate the egg during fertilization.

Sperm-resistant Membrane

A barrier that prevents sperm from penetrating and fertilizing an egg, contributing to contraceptive strategies or infertility.

Gastrulation

Process in embryonic development during which the three germ layers (ectoderm, mesoderm, and endoderm) form.

Blastula

An early stage of embryonic development in animals, characterized by a spherical layer of cells (blastomeres) surrounding a fluid-filled cavity (blastocoel).