Joy Reports the Following Income and Loss Activities A,B,and C Are All Passive Activities

question 29

Multiple Choice

Joy reports the following income and loss: $$\begin{array} { | l | r | } \hline \text { Salary } & \$ 120,000 \\\hline \text { Income from activity A } & 60,000 \\\hline \text { Loss from activity B } & ( 35,000 ) \\\hline \text { Loss from activity C } & ( 55,000 ) \\\hline\end{array}$$ Activities A,B,and C are all passive activities.
Based on this information,Joy has

• A)adjusted gross income of $90,000.
• B)salary of $120,000 and deductible net losses of $30,000.
• C)salary of $120,000 and net passive losses of $30,000 that will be carried over.
• D)salary of $120,000,passive income of $60,000,and passive loss carryovers of $90,000.

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Definitions:

Equity Method Investments

An accounting technique used by a company to record its investment in another company, where the investment gives the investor a significant influence over the investee.

Account For

Refers to the process of recording financial transactions in the financial statements.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is global in scope.