The US States Apply Different Rules in Treating Federal Consolidated Groups

question 113

Essay

The U.S. states apply different rules in treating Federal consolidated groups for corporate income tax purposes. Describe at least three different approaches that the states currently use to allow or restrict conglomerates' use of consolidations.

---

Definitions:

Bad Debts Expense

An expense account reflecting estimated uncollectible accounts receivable.

Percent of Sales Method

A forecasting technique used in finance to predict future variables such as assets, liabilities, and expenses, based on projected sales figures.

Uncollectible

Refers to accounts receivable that a company has determined cannot be collected from customers.

Aging of Accounts Receivable Method

An accounting technique used to estimate the amount of uncollectable accounts receivable based on their age.