Quick Company Owns All of the Outstanding Shares of Peanut

question 37

Multiple Choice

Quick Company owns all of the outstanding shares of Peanut Ltd. During the year, Peanut Ltd. declared and paid a dividend of $10,000. The tax rate is 30% for both entities. In preparation for the year-end consolidated financial statements, what are the consolidated financial statement adjustments required?

• A)Decrease Dividend Revenue: $10,000, decrease Dividend Declared and Paid: $10,000, decrease Income Tax Expense: $3,000, and decrease Income Tax Payable: $3,000.
• B)Increase Dividend Revenue: $10,000, increase Dividend Declared and Paid: $10,000, increase Income Tax Expense: $3,000, and increase Income Tax Payable: $3,000.
• C)Decrease Dividend Revenue: $10,000, decrease Dividend Declared and Paid: $10,000.
• D)Increase Dividend Revenue: $10,000, increase Dividend Declared and Paid: $10,000.

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Definitions:

Disposal Business Segment

Refers to the process of selling, closing, or abandoning a part of a company's operations or divisions.

Interim Financial Reporting

The reporting of the financial results of any period that is shorter than a fiscal year, such as quarterly or semi-annual reports.

Permanent Inventory

An inventory management method where stock levels are continually updated to reflect purchases and sales.

Standard Cost System

An accounting system that uses cost estimates for materials, labor, and overhead to assess operational efficiency and inventory valuation.