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Ponte Corporation owns 25 percent of the voting shares of Scala Corporation. In 20X8, Scala reported...

Ponte Corporation owns 25 percent of the voting shares of Scala Corporation. In 20X8, Scala reported net income of $120,000 and paid dividends of $30,000. Ponte uses the equity method to account for this investment. Ponte reported taxable income of $160,000 on its separate operations and has an effective tax rate of 40 percent. There is an 80 percent exemption on intercompany dividends.

35) Based on the preceding information, income tax expense for Ponte for the year 20X8 will be:

A) $67,000

B) $64,600

C) $64,000

D) $66,400

Answer: D

36) Based on the preceding information, income taxes payable for Ponte for the year 20X8 will be:

A) $67,000

B) $64,600

C) $64,000

D) $76,000

Answer: B

Please explain how to calculate these numbers!

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