Ted, Who Is Single, Owns a Personal Residence in the City

question 10

Multiple Choice

Ted, who is single, owns a personal residence in the city. He also owns a condo near the ocean. He uses the condo as a vacation home. In March 2014, he borrowed $50,000 on a home equity loan and used the proceeds to acquire a luxury automobile. During 2014, he paid the following amounts of interest:

$\begin{array}{llr} \text {-on his personal residence } &\$15,500\\ \text { -on the condo } &6,200\\ \text { -on the home equity loan } &4,800\\ \text {-on credit card obligations } &1,700\\\end{array}$





What amount, if any, must Ted recognize as an AMT adjustment in 2014?

• A) $0.
• B) $4,800.
• C) $6,200.
• D) $11,000.
• E) None of the above.

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Definitions:

Spending Variance

The difference between the actual amount spent and the budgeted or standard amount expected to be spent.

Power Cost

The expense associated with the consumption of electrical power used in the operations of a business or manufacturing process.

Materials Quantity Variance

The difference between the actual amount of materials used in production and the standard amount expected to be used, multiplied by the standard cost per unit.

Raw Materials Price

The cost of raw materials required in the manufacturing process, a critical factor in the overall production cost and pricing strategy.