Exam 3: Partially Owned Created Subsidiaries & Variable Interest Entities

To file a consolidated income tax return, a subsidiary must be at least _________________________owned either directly or indirectly, with at least one subsidiary being _________________________________________ owned by the parent.

When a consolidated income tax return is filed and the subsidiary issues separate financial statements to its lenders, income taxes must be reported in the subsidiary's income statement.

Proportional consolidation is not allowed under current GAAP.

_____ For 2006, Pyna reported $500,000 of net income from its own separate operations. This amount excludes income relating to Syna, its 80%-owned created subsidiary, which reported $100,000 of net income and declared $55,000 of dividends in 2006. What is the consolidated net income under the economic unit concept?

A parent can file a consolidated income tax return only with its ________________ _______________________________ subsidiaries.

Under current GAAP, both the parent company concept and the economic unit concept are allowed.

Events that cause a reassessment of determining the primary beneficiary are called _______________________________ .

The 100% dividend received deduction is applicable only to ___________________________________________________ subsidiaries.

_____ The NCI in a created subsidiary's net assets is based on the subsidiary's book values under which of the following concepts?

Dividends paid to noncontrolling shareholders are treated as a(n) _______________ __________________ of the noncontrolling interest from a consolidated perspective.

To file a consolidated income tax return, the parent must have a 100% ownership interest in the subsidiary.

When a company has a subsidiary instead of a branch or division, an element of ____________________________________ corporate taxation would appear to exist.

_____ To file a consolidated tax return, a subsidiary must be directly or indirectly

Under the economic unit concept, the NCI in the subsidiary's net income is presented as a deduction in arriving at consolidated net income.

based on the information given. The following (a) seven account balances and (b) statements of retained earnings were obtained from the separate company statements of Parr Inc. and its 80%-owned created sub-sidiary, Subb Inc. (Parr's only subsidiary), at the end of 2006: When Subb was created (in 2004, 20% of the common shares it issued were sold to private investors. Requirement 2: For items 12-15, calculate the amount that would appear in the 2006 consolidated statements -_____(item 15)

Section 482 problems are avoided if a consolidated income tax return is filed.

A foreign subsidiary is not consolidated because the foreign government has imposed dividend payment restrictions. The cost method would usually be used instead of the equity method in accounting for the investment in the subsidiary.

The "dividend received deduction" applies only to domestic subsidiaries.