: DPAD – Foreign & domestic activities
Flamingo Company sells lawn furniture through big box stores. It manufactures some of
the furniture and imports some from unrelated foreign producers.
For 2010, Flamingo’s
records revealed the following information:
Cost of goods sold
Flamingo, also has selling and marketing expenses of $600,000 and administrative
expenses of $200,000.
Flamingo’s uses the simplified deduction method.
1. What is Flamingo’s DPGR?
DPGR cannot include gross receipts from the resale of imported
2. What is Flamingo’s QPAI?
The other expenses – selling $600,000 and administrative $200,000 – are
allocated using the fraction based on DPRG/total gross receipts.
$2.5M/$4M x $800,000 = $500,000.
3. What is Flamingo’s DPAD?