In the Current Year, FurnitureKing Corporation Recognized $32,000 of Income

question 94

Multiple Choice

In the current year, FurnitureKing Corporation recognized $32,000 of income from aninstallment sale it made in a previous tax year. If installment sales are the only difference between ACE and alternative minimum taxable income (before the ACE adjustment) , what is the amount and nature of the ACE adjustment for the current tax year?

• A) $24,000 unfavorable.
• B) $32,000 unfavorable.
• C) $32,000 favorable.
• D) $24,000 favorable.

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Definitions:

Political Risk

In international business, the chance that the value of a firm’s investment in a foreign country will be reduced by political actions of either the foreign government or terrorists.

Exchange Rate Risk

The risk that international trade dealings will earn less than expected because of movement in exchange rates.

Economic Risk

The possibility of loss caused by macroeconomic or market conditions, such as changes in interest rates or recessions.

Forward Rate

The agreed upon exchange rate for a currency transaction that will occur at a future date.