Barry and Larry, Who Are Brothers, Are Equal Owners in Chickadee

question 47

Multiple Choice

Barry and Larry, who are brothers, are equal owners in Chickadee Corporation. On July 1, 2014, each loans the corporation $10,000 at an annual interest rate of 10%. Both shareholders are on the cash method of accounting, while Chickadee Corporation is on the accrual method. All parties use the calendar year for tax purposes. On June 30, 2015, Chickadee repays the loans of $20,000 together with the specified interest of $2,000. How much of the interest can Chickadee Corporation deduct in 2014?

• A) $0.
• B) $500.
• C) $1,000.
• D) $2,000.
• E) None of the above.

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Definitions:

Unethical

Behaviors or practices that are morally wrong or violate established standards of conduct.

Core Values

Fundamental beliefs or principles that are central to an organization's identity and guide its decision-making and actions.

Hyper-Norms

Universal principles or standards that govern behavior and transcend cultural, religious, and societal differences.

Human Dignity

The inherent worth of all individuals regardless of status, ensuring they are treated with respect and fairness.