30.Which of the following statements is CORRECT in regard to compensation expense paid to non-shareholders for anaccrual-basis corporation?O The corporation may not deduct an excess of $1 million per employee per tax yearIf the compensation amount is considered excessive, it may be reclassified as a dividend.O The corporation may deduct all amounts earned by the employees in the current taxable year as long as it is paid within two andone-half months after the taxable year-end.31. Which one of the following statements describes the bad-debt deduction for a corporation?O The deduction allowed for a specific bad debt is equal to its fair market valueCorporations are allowed a deduction for partial worthlessness of bad debts, but only to the extent the debt has been chargedoff.O if a receivable is not collected by a cash-method corporation, a bad-debt deduction is allowed.32 Which one of the following statements concerning taxes reported on Form 1120 is CORRECT?O Federal taxes, other than income taxes, generally are reported on Line 17, Taxes.O Local municipality special assessments that tend to increase the value of the property are deductible.O Taxpayers must capitalize annual taxes on unimproved and unproductive property.33. Which one of the following statements concerning organization costs is CORRECT?Start-up costs are also known as organization costsO Costs that are not currently deductible are amortized ratably over a five-year periodO Legal fees and expenses for organizational meetings incident to the creation of a corporation should be classified asorganization costs.

30. Which of the following statements is CORRECT in regard to compensation expense paid to non-shareholders for an accrual-basis corporation? O The corporation may not deduct an excess of $1 million per employee per tax year If the compensation amount is considered excessive, it may be reclassified as a dividend. O The corporation may deduct all amounts earned by the employees in the current taxable year as long as it is paid within two and one-half months after the taxable year-end.

30. Which of the following statements is CORRECT in regard to compensation expense paid to non-shareholders for an accrual-basis corporation? O The corporation may not deduct an excess of $1 million per employee per tax year If the compensation amount is considered excessive, it may be reclassified as a dividend. O The corporation may deduct all amounts earned by the employees in the current taxable year as long as it is paid within two and one-half months after the taxable year-end.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

30.
Which of the following statements is CORRECT in regard to compensation expense paid to non-shareholders for an
accrual-basis corporation?
O The corporation may not deduct an excess of $1 million per employee per tax year
If the compensation amount is considered excessive, it may be reclassified as a dividend.
O The corporation may deduct all amounts earned by the employees in the current taxable year as long as it is paid within two and
one-half months after the taxable year-end.
31. Which one of the following statements describes the bad-debt deduction for a corporation?
O The deduction allowed for a specific bad debt is equal to its fair market value
Corporations are allowed a deduction for partial worthlessness of bad debts, but only to the extent the debt has been charged
off.
O if a receivable is not collected by a cash-method corporation, a bad-debt deduction is allowed.
32 Which one of the following statements concerning taxes reported on Form 1120 is CORRECT?
O Federal taxes, other than income taxes, generally are reported on Line 17, Taxes.
O Local municipality special assessments that tend to increase the value of the property are deductible.
O Taxpayers must capitalize annual taxes on unimproved and unproductive property.
33. Which one of the following statements concerning organization costs is CORRECT?
Start-up costs are also known as organization costs
O Costs that are not currently deductible are amortized ratably over a five-year period
O Legal fees and expenses for organizational meetings incident to the creation of a corporation should be classified as
organization costs.

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