During 20X5, X co. had the following income and expenses: Gross income from operations $3,000,000 Business expenses <1,400,000> Dividends received from Y co. (32% owned by X co.) 400,000 Capital gains 150,000 Capital loss carry forward <183,000> Net operating loss carry forward <25,000>

During 20X5, X co. had the following income and expenses: Gross income from operations $3,000,000 Business expenses <1,400,000> Dividends received from Y co. (32% owned by X co.) 400,000 Capital gains 150,000 Capital loss carry forward <183,000> Net operating loss carry forward <25,000>

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

During 20X5, X co. had the following income and expenses:

Gross income from operations $3,000,000

Business expenses <1,400,000>

Dividends received from Y co. (32% owned by X co.) 400,000

Capital gains 150,000

Capital loss carry forward <183,000>

Net operating loss carry forward <25,000>

a. Determine X co.’s dividends received deduction in 20X5?

b. Determine X co.’s dividends received deduction in 20X5 assuming that there was no NOL carry forward and X co.’s business expenses were:

(i) $3,050,000 or (ii) $3,200,000

Definition Definition Increase in the value of a capital asset and the amount that is realized when the asset is sold off. A capital gain may be short-term or long-term depending on the tenure for which the asset is held.

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