DPAD_foreign_activities_solution - Solution: DPAD Foreign &...

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: 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: Furniture sold Manufactured Imported Gross receipts 2,500,000 1,500,000 Cost of goods sold 1,000,000 750,000 Flamingo, also has selling and marketing expenses of $600,000 and administrative expenses of $200,000. Flamingo’s uses the simplified deduction method. Required : 1. What is Flamingo’s DPGR? $2,500,000 . DPGR cannot include gross receipts from the resale of imported goods. 2. What is Flamingo’s QPAI? DPRG 2,500,000 CGS (1,000,000) Other expenses (500,000) QPAI 1,000,000 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?
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This note was uploaded on 09/09/2011 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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DPAD_foreign_activities_solution - Solution: DPAD Foreign &...

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