ParentCo Owned 100% of SubCo for the Entire Year,and Both

question 37

Multiple Choice

ParentCo owned 100% of SubCo for the entire year,and both companies use the accrual method of tax accounting.During the year,SubCo purchased $20,000 of supplies from ParentCo.In addition,SubCo provided internal audit services to ParentCo,which were worth $40,000.Including these transactions,ParentCo's separate taxable income was $75,000,and SubCo's separate taxable income was $80,000.What is the group's consolidated taxable income for the year?

• A)$215,000.
• B)$195,000.
• C)$175,000.
• D)$155,000.

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Definitions:

Corporate Form

A legal structure for businesses that is recognized as a separate entity from its owners, providing limited liability protection.

Limited Liability

This is a legal structure that protects business owners' personal assets from being used to pay off business debts and liabilities.

Financial Information

Data related to the financial status of a company, including income statements, balance sheets, and cash flow statements.

Decision

The process of making choices or identifying a course of action from several alternatives, often based on information or data analysis.