Garrison holds a controlling interest in Robertson’s outstanding stock. For the current year, the following information has been gathered about these two companies: Garrison Robertson
Separate $300,000 $200,000
operating income (includes $50,000 intra-entity
gross profit in ending inventory)
Dividends paid ...32,000 50,000
Tax rate . . . . . . . . . 40% 40%

Garrison uses the initial value method to account for the investment in Robertson. Garrison’s separate operating income figure does not include dividend income for the current year.
a. Assume that Garrison owns 80 percent of Robertson’s voting stock. On a consolidated tax return, what amount of income tax is paid?
b. Assume that Garrison owns 80 percent of Robertson’s voting stock. On separate tax returns, what total amount of income tax is paid?
c. Assume that Garrison owns 70 percent of Robertson’s voting stock. What total amount of income tax expense does a consolidated income statement recognize?
d. Assume that Garrison holds 60 percent of Robertson’s voting stock. On a separate income tax return, what amount of income tax does Garrison have to pay?