Palomba Corporation allocates consolidated income taxes to its 90%-owned subsidiary using the percentage allocation method. Under this method, consolidated income tax expense will be allocated to a subsidiary
A. on the basis of the agreement between the parent and subsidiary.
B. on the basis of the subsidiary’s pretax income as a percentage of consolidated pretax income.
C. on the basis of the income taxes remitted to the IRS.
D. 90% to the subsidiary.
Answer:B
Palomba Corporation allocates consolidated income taxes to its 90%-owned subsidiary using the percentage allocation method. Under this method, consolidated income tax expense will be allocated to a subsidiary
A. on the basis of the agreement between the parent and subsidiary. B. on the basis of the subsidiary’s pretax income as a percentage of consolidated pretax income. C. on the basis of the income taxes remitted to the IRS. D. 90% to the subsidiary.