Which of the following statements is incorrect with respect to determining E&P?All tax-exempt income should be added back to taxable income.Dividends received deductions should be added back to taxable income.Charitable contributions in excess of the 10% taxable income limit should be subtracted from taxable income.Federal income tax refunds should be added back to taxable income.None of the above statements are incorrectMY ANSWER: 5. None of the above.Reasoning: All the above statements are correct with regard to the calculation of current E&P. E&P is the ability of the company to pay dividends to its shareholders.Am I correct? If not, please explain. Thank you in advance!

Exploration and production (E&P) is the upstream component of the oil and gas business that…

Answered: Federal income tax refunds should be…

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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Which of the following statements is incorrect with respect to determining E&P?

All tax-exempt income should be added back to taxable income.
Dividends received deductions should be added back to taxable income.
Charitable contributions in excess of the 10% taxable income limit should be subtracted from taxable income.
Federal income tax refunds should be added back to taxable income.
None of the above statements are incorrect

MY ANSWER: 5. None of the above.

Reasoning: All the above statements are correct with regard to the calculation of current E&P. E&P is the ability of the company to pay dividends to its shareholders.

Am I correct? If not, please explain. Thank you in advance!

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