100 is eliminated upon consolidation this answer

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Unformatted text preview: for assessments runs from the date of the filing of the return, or, if later, the due date of the return. Choices "a", "b", and "d" are incorrect, per the above rule. CPA-02126 Type1 M/C A-D 44. CPA-02126 ARE May 94 #23 Corr Ans: D PM#60 R 3-01 Page 34 Tech Corp. files a consolidated return with its wholly-owned subsidiary, Dow Corp. During 1993, Dow paid a cash dividend of $20,000 to Tech. What amount of this dividend is taxable on the 1993 consolidated return? a. b. c. d. $20,000 $14,000 $6,000 $0 CPA-02126 Explanation Choice "d" is correct. Intercompany dividends are eliminated when preparing a consolidated return. The $20,000 came from income of Dow and is reported as part of consolidated income. The receipt of the dividend by Tech is not included again. Choice "a" is incorrect. As the two corporations file a consolidated return, 100% of the dividends are eliminated, not taxable. Choice "b" is incorrect. This answer is 70% of the $20,000 dividend. 100% of t...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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