Wendell Is an Executive with CFO Tires

question 82

Essay

Wendell is an executive with CFO Tires.At the beginning of this year the corporation loaned Wendell $50,000 at an interest rate of one percent.Wendell would have paid interest of $2,500 this year if the interest rate on the loan had been set at the prevailing Federal interest rate.Wendell used the funds as a down payment on a vacation home and during the year he paid $500 of interest to CFO.On December 31,CFO forgave the loan and remaining interest.What amount of gross income does Wendell recognize from the loan this year?

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Definitions:

Tools

Instruments or devices used to carry out a particular function, especially in the context of physical tasks or labor.

Algorithms

A step-by-step procedure or formula for solving a problem or accomplishing a task, often used in computing and mathematics.

Heuristics

Simple, efficient rules, either hard-coded by evolutionary processes or learned, that help in making decisions, forming judgments, and solving problems.

Fixation

An unhealthy focus or attachment to an object, person, or concept, which can interfere with normal psychological development or behavior.