[Jzjac]

Hey everyone!

I am currently reviewing for FAR and have a question regarding the Investee’s Undistributed Earnings. I was wondering if someone can explain this further than what it says in the Becker material. This is in F6 of becker if anyone wants to look at it, on page 49 of the 2012 edition material.

I am just totally lost and need some direction. This is a small section in the whole chapter (1page) but I want to get a grasp of everything.

If anyone has any knowledge on this please share, I and I’m sure others would greatly appreciate it.

BEC - Passed!
FAR - Passed!
AUD - Passed!
REG - Passed!

[Anonymous]

I don't have Becker. What does it say?

[Jzjac]

I was just stating the becker reference incase anyone had it to make it easier for me to understand. I just want to know how to do it haha

BEC - Passed!
FAR - Passed!
AUD - Passed!
REG - Passed!

[mgoloubenko]

Okay there is a similar one on the HW, you can search CPA-00805 ( Question 12 in Income Taxes in F6) for the question. I will try to explain what I gathered based on the HW question in Passmaster.

My understanding is that the dividend portion is paid out in cash so it is Taxable Income, while the Equity portion is perhaps still receivable ( owed by the sub to the parent but not received yet so it's accrued for but cash hasn't been given). 80% of this is non-deductible (nontaxable) which creates a permanent difference in two different amounts- one book, one tax.

Taxable Income of 30,000 – 24,000 ( Permanent Non-Taxable 30,000 x .8) = 6,000

Financial Income of 180,000- 144, 444 ( Permanent Non-Taxable 180,000 x .8) = 36,000

36,000-6,000= 30,000 temporary difference

Does that make any sense now?

FAR 4/9/12- PASSED
BEC 7/13/12- PASSED
AUD 8/16/12- Ughhh 71, Rematch: 90!!!
REG-12/6/12 PASSED

USC MAcc- Fight on!

They say good things come to those who wait, but only those things that are left by those who hustle.

[Jzjac]

Yes I definitely have better understanding of it now. Thanks!

BEC - Passed!
FAR - Passed!
AUD - Passed!
REG - Passed!

[Author]

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