Problem 5-62 (LO 5-3) (Algo)Fred currently earns $10,500 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate.His employer is willing to pay Fred $11,500 per month if he accepts the assignment. Assume that the maximum foreign-earned incomeexclusion for next year is $112,000.Required:a-1. How much U.S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseasfor the entire year?a-2. If Fred's employer also provides him free housing abroad (cost of $21,500), how much of the $21,500 is excludable from Fred'sincome?b. Suppose that Fred's employer has offered Fred a six-month overseas assignment beginning on January 1 of next year. How muchU.S. gross income will Fred report next year if he accepts the six-month assignment abroad and returns home on July 1 of next year?c-1. Suppose that Fred's employer offers Fred a permanent overseas assignment beginning on March 1 of next year. How much U.S.gross income will Fred report next year if he accepts the permanent assignment abroad? Assume that Fred will be abroad for 305days out of 365 days next year.Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.c-2. If Fred's employer also provides him free housing abroad (cost of $16,750 next year), how much of the $16,750 is excludable fromFred's income? Assume that Fred will be abroad for 305 days out of 365 days next year.Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.

Fred currently earns $10,500 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $11,500 per month if he accepts the assignment. Assume that the maximum foreign-earned income exclusion for next year is $112,000. Required: a-1. How much U.S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseas for the entire year?

Fred currently earns $10,500 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $11,500 per month if he accepts the assignment. Assume that the maximum foreign-earned income exclusion for next year is $112,000. Required: a-1. How much U.S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseas for the entire year?

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

Problem 5-62 (LO 5-3) (Algo)
Fred currently earns $10,500 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate.
His employer is willing to pay Fred $11,500 per month if he accepts the assignment. Assume that the maximum foreign-earned income
exclusion for next year is $112,000.
Required:
a-1. How much U.S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseas
for the entire year?
a-2. If Fred's employer also provides him free housing abroad (cost of $21,500), how much of the $21,500 is excludable from Fred's
income?
b. Suppose that Fred's employer has offered Fred a six-month overseas assignment beginning on January 1 of next year. How much
U.S. gross income will Fred report next year if he accepts the six-month assignment abroad and returns home on July 1 of next year?
c-1. Suppose that Fred's employer offers Fred a permanent overseas assignment beginning on March 1 of next year. How much U.S.
gross income will Fred report next year if he accepts the permanent assignment abroad? Assume that Fred will be abroad for 305
days out of 365 days next year.
Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.
c-2. If Fred's employer also provides him free housing abroad (cost of $16,750 next year), how much of the $16,750 is excludable from
Fred's income? Assume that Fred will be abroad for 305 days out of 365 days next year.
Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.

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Step 2: (a.1) Determine U.S. gross income will Fred report if he accepts the assignment abroad:

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Step 3: (a.2) Determine how much of the $21,500 is excludable from Fred’s income:

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Step 4: (b) Determine U.S. gross income will Fred report if he accepts the assignment abroad:

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Step 5: (c.1) Determine U.S. gross income will Fred report if he accepts the permanent assignment abroad:

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Step 6: (c.2) Determine how much of the $16,750 is excludable from Fred’s income:

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