FruAgro Company has average annual gross receipts of $58 million annually. This year, FruAgro earned $3 million of business interest income, incurred $8 million of business interest expense and has adjusted taxable income of $14 million. Required: Compute FruAgro's current deduction for business interest and the amount of any business interest carryforward. Note: Enter your answers in dollars not in millions of dollars. Business interest deduction Business interest carryforward Amount
FruAgro Company has average annual gross receipts of $58 million annually. This year, FruAgro earned $3 million of business interest income, incurred $8 million of business interest expense and has adjusted taxable income of $14 million. Required: Compute FruAgro's current deduction for business interest and the amount of any business interest carryforward. Note: Enter your answers in dollars not in millions of dollars. Business interest deduction Business interest carryforward Amount
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1: Calculation of deduction
Annual Gross Receipt = $58 million
Business Interest Income = $3 million
Business Interest Expenses = $8 million
Adjusted taxable Income = $14 million
Working note - 1
Deduction = Business Income + 30% of adjusted total income
= $3 + 30% ( 14)
= $3 + $4.2
= $7.2 Million
Working note - 2
The amount carried forward = Business Interest Expenses - deduction
= $8 -7.2
= $0.8 Million
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