Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property Required: State A $ 7,500,000 3,500,000 2,500,000 State B $ 4,750,000 2,700,000 1,550,000 Total $ 12,250,000 6,200,000 4,050,000 a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each state? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. Note: Round all apportionment factors to 2 decimal places, e.g., 0.4715 would be entered as 47.15% and final answer dollar values to the nearest whole dollar. Consider your intermediate values in dollars and not in millions. Enter your answers also in dollars and not in millions of dollars. State A State B Apportionment factors 59.35% Income apportioned $ 63 x $ 80.00 % 809,700 × State tax liability $ 59,350 x $ 48,582 × Show less▲
Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property Required: State A $ 7,500,000 3,500,000 2,500,000 State B $ 4,750,000 2,700,000 1,550,000 Total $ 12,250,000 6,200,000 4,050,000 a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each state? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. Note: Round all apportionment factors to 2 decimal places, e.g., 0.4715 would be entered as 47.15% and final answer dollar values to the nearest whole dollar. Consider your intermediate values in dollars and not in millions. Enter your answers also in dollars and not in millions of dollars. State A State B Apportionment factors 59.35% Income apportioned $ 63 x $ 80.00 % 809,700 × State tax liability $ 59,350 x $ 48,582 × Show less▲
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and
has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state
tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its
sales, payroll, and property factors:
Sales
Payroll
Average property
Required:
State A
$ 7,500,000
3,500,000
2,500,000
State B
$ 4,750,000
2,700,000
1,550,000
Total
$ 12,250,000
6,200,000
4,050,000
a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability.
b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll
and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each
state?
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability.
Note: Round all apportionment factors to 2 decimal places, e.g., 0.4715 would be entered as 47.15% and final answer dollar
values to the nearest whole dollar. Consider your intermediate values in dollars and not in millions. Enter your answers also in
dollars and not in millions of dollars.
State A
State B
Apportionment factors
59.35%
Income apportioned
$
63 x
$
80.00 %
809,700 ×
State tax liability
$
59,350 x
$
48,582 ×
Show less▲
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