37 2009 devrybecker educational development corp all

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Unformatted text preview: 80% or more). [$600,000 + $100,000 - $400,000 - $100,000 DRD = $200,000] Choice "c" is incorrect. The dividends received deduction allows for a special deduction of 80% of the dividends received from a 20% to <80% owned domestic corporation, not 70% of the dividends received (which applies only to ownership of 0% to <20%). [$600,000 + $100,000 - $400,000 - $70,000 DRD = $230,000] Choice "d" is incorrect. This answer option does not include the special dividends received deduction [$600,000 + $100,000 - $400,000 - $0 DRD = $300,000]. CPA-05530 Type1 M/C A-D Corr Ans: D PM#111 R 3-01 78. CPA-05530 Released 2007 Page 33 A C corporation must use the accrual method of accounting in which of the following circumstances? a. b. c. d. The business had average sales for the past three years of less than $1 million. The business is a service company and has over $1 million in sales. The business is a personal service business with over $15 million in sales. The business has more than $10 million in average sales. CPA-05530 Explanation Choice "d" is correct. While the cash basis of accounting is used for...
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