Employees of the Valley Country Club Are Allowed to Use

question 77

Multiple Choice

Employees of the Valley Country Club are allowed to use the golf course without charge before and after working hours on Mondays when the number of players on the course is at its lowest.Tom, an employee of the country club, played 40 rounds of golf during the year at no charge when the nonemployee charge was $20 per round.

• A)Tom must include $800 in gross income.
• B)Tom is not required to include anything in gross income because it is a de minimis fringe benefit.
• C)Tom is not required to include the $800 in gross income because the use of the course was a gift.
• D)Tom is not required to include anything in gross income because this is a no-additional-cost service fringe benefit.
• E)None of these.

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Definitions:

Operating Activities

Part of a company's cash flow statement that shows the cash generated or used by its core business operations.

Equity Method

An accounting technique used to reflect the investment in another company, typically applied when an investing entity holds significant influence over the investee.

Investee Earnings

The share of income that an investor recognizes from its investment in another entity.

Net Income

Net Income is the total profit or earnings of a company after all expenses, taxes, and costs have been deducted from total revenue.