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$ 275,000 Choice "a" is incorrect. Cost of sales must be deducted.
Choice "b" is incorrect. Cost of sales must be deducted and 100%, not 80%, of the dividends received
are included in income before special deductions.
Choice "d" is incorrect. The $25,000 dividend must be included in income before special deductions. CPA-02147 Type1 M/C A-D Corr Ans: D PM#71 R 3-01 53. CPA-02147 PII May 93 #42 Page 6
Ace Rentals Inc., an accrual-basis taxpayer, reported rent receivable of $35,000 and $25,000 in its 19X2
and 19X1 balance sheets, respectively. During 19X2, Ace received $50,000 in rent payments and $5,000
in nonrefundable rent deposits. In Ace's 19X2 corporate income tax return, what amount should Ace
include as rent revenue?
Choice "d" is correct. Rent revenue under the accrual basis would include the cash received ($50,000)
plus the increase in the rent receivable ($10,000 = $35,000 − 25,000), or $60,000. In addition, the $...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land