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RadioCo, a domestic corporation, owns 100% of TVCo, a manufacturing facility in

ID: 2797162 • Letter: R

Question

RadioCo, a domestic corporation, owns 100% of TVCo, a manufacturing facility in Ireland. TVCo has no operations or activities in the United States. The U.S. tax rate is 35%, and the Irish tax rate is 12.5%. For the current year, RadioCo earns $200,000 in taxable income from its U.S. operations. TVCo earns $800,000 in taxable income from its operations, pays $100,000 in taxes to Ireland, and makes no distributions to RadioCo. For tax rates, enter your answers as a percentage. a. Enter the correct amounts below for Without ASC 740-30 (APB 23) and With ASC 740-30 (APB 23).

Without ASC 740-30 (APB 23): RadioCo's total tax expense and effective tax rate for book purposes is $ ______and _______%.

With ASC 740-30 (APB 23): RadioCo's total tax expense and effective tax rate for book purposes is $ _______and__________ %.

Explanation / Answer

Tax expense= 170000, effective tax rate= 17%

With ASC:

Total tax expense= 415000= 170000+245000

Effective tax rate= 41.5%

Without ASC 740-30 Entity Taxable income Tax rate Taxes Radio Co                           2,00,000 35%      70,000 TVCo                           8,00,000 12.50% 1,00,000 Consolidated amount                         10,00,000 1,70,000 Effective tax rate Income tax expense/   taxable income   *100 170000/1000000 *100 17.00%