Ling owns 3 passive investments. During the last two years, she has the following income and...
Ling owns 3 passive investments. During the last two years, she has the following income and loss from each activity:
|
2014 |
2015 |
|
|
Activity 1 |
$(14,000) |
$(6,000) |
|
Activity 2 |
(6,000) |
(1,000) |
|
Activity 3 |
8,000 |
12,000 |
At the end of 2015 what is the amount of suspended loss allocated to Activity 2?
|
a. |
$1,695 |
|
|
b. |
$1,815 |
|
|
c. |
$5,185 |
|
|
d. |
$5,305 |
|
|
e. |
$7,000 |
According to the test bank 2016, the answer is (a). Please explain. Thank you!
Homework Answers
Answer is (a)
| Activity 1 | Activity 2 | Activity 3 | |
| Porift or loss from the activity 2014 | (14,000) | (6,000) | 8,000.00 |
| Allocation of prifit of Activity 3 (14:6 - Ratio) | 5,600 | 2,400 | |
| Net Loss Carried Forward | (8,400) | (3,600) | |
| Porift or loss from the activity 2015 | (6,000) | (1,000) | 12,000.00 |
| Total Loss For the year 2015 | (14,400) | (4,600) | |
| Allocation of prifit of Activity 3 (144:46 - Ratio) | 9,095 | 2,905 | |
| At the end of 2015 Amount of suspended loss | (5,305) | (1,695) |
Computation of Allocation of profit of Activity 3, 2014
| Allocation of profit of Activity 3 (14:6 - Ratio) | 8000*14/20 | 2400 |
| 5,600.00 | 2,400.00 |
Computation of Allocation of profit of Activity 3, 2015
| Allocation of profit of Activity 3 (144:46 - Ratio) | 12000*144/190 | 12000*46/190 |
| 9095 | 2905 |
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