Pretax operating incomes of Pang Corporation and its 70%-owned subsidiary, Sala Corporation, for the year 2014, are shown below. Sala pays total dividends of $60,000 for the year. There are no unamortized book value/fair value differentials relating to Pang's investment in Sala. During the year, Pang sold land to Sala for a gain of $35,000 and Sala holds this land at the end of the year. The marginal corporate tax rate for both corporations is 34%.
Required:
1. Determine the separate amounts of income tax expense for Pang and Sala as if they had filed separate tax returns.
2. Determine Pang's net income from Sala.
Definitions:
Nonnormal
Refers to data distributions that do not follow a normal distribution, often characterized by skewness or a lack of symmetry.
Randomly Selected
A process of selection in which each member of a set has an equal probability of being chosen.
Probability P
The likelihood of a specific event occurring, often denoted as a number between 0 and 1.
Standard Deviation
A statistic that measures the dispersion or variability of a dataset relative to its mean, indicating how spread out the data points are.
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