Which of the Following Events Is an Intercompany Transaction

question 29

Multiple Choice

Which of the following events is an intercompany transaction?

• A)a capital contribution
• B)accrual of interest on a loan made by one group member to another group member; both group members use the accrual method of accounting
• C)dividend payment received from a subsidiary corporation to its parent corporation; the subsidiary corporation is not an includible corporation
• D)a parent corporation's sale of stock of a subsidiary corporation to a nonmember of the group

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Definitions:

Corporate Income Tax

Taxes imposed on the income or profit of corporations and other business entities by government authorities.

Outlet Stores

Retail stores that sell products directly from manufacturers at reduced prices, often overstock or discontinued lines.

Return On Total Assets

A measure of the profitability of assets, without regard to the equity of creditors and stockholders in the assets.

Sales

The transactions involving the exchange of goods or services for money, representing a critical source of revenue for businesses.