BobCo Incurred $60,000 of Qualifying Research and Experimentation Expenses in 20x5.It

question 2

Multiple Choice

BobCo incurred $60,000 of qualifying research and experimentation expenses in 20x5.It had gross receipts of $420,000.Prior years' research expenses and gross receipts were $$\begin{array} { l l l } \text { Research}& \text {Expenses } & \text { Gross Receipts } \\1986 & \$ 33,000&\$ 370,000 \\1987 & 25,000&250,000 \\1988 & 32,000&380,000 \\2000 & 33,000&410,000 \\2001 & 30,000&410,000 \\2002 & 25,000&400,000 \\2003 & 32,000&380,000 \\2004 & 30,000&410,000\end{array}$$ BobCo's tax liability before credits was $25,000.Its research credit for 2005 is:

• A)$25,000
• B)$10,000
• C)$20,000
• D)$8,000
• E)$4,800

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Definitions:

Strategic Thinking

The process of analyzing critical factors and variables that will influence the long-term success of a business, then mapping out actions to achieve desired goals.

Industry Attractiveness

A measure of the potential profitability and prospects for growth within a particular industry or market sector.

Bargaining Power of Buyers

The influence that customers have over a producing industry, often affecting pricing, quality, and terms of sale.

Degree of Rivalry

The extent and intensity of competition among businesses within the same industry.