Oakland Corporation Reported a Net Operating Loss of $500,000 in Year

question 71

Multiple Choice

Oakland Corporation reported a net operating loss of $500,000 in year 1.Not included in the year 1 taxable income computation was a disallowed entertainment expense of $20,000, tax-exempt income of $10,000, and deferred gain on an installment sale of $250,000.The corporation's current earnings and profits for year 1 would be:

• A)$(500,000).
• B)$(720,000).
• C)$(510,000).
• D)$(260,000).

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Definitions:

Outputs

The goods or services produced by a business or an economy.

Long-run Average Cost

The per unit cost of production when all inputs, including those typically fixed, can be adjusted.

Short-run Marginal Cost

The cost incurred by producing one additional unit of a product or service in the short term, where some factors of production are fixed.

Envelope

In economics, often describes a theoretical outer limit or boundary, such as the envelope curve which envelopes all the possible positions of equilibrium.