Randy Is the Manager of a Motel

question 44

Multiple Choice

Randy is the manager of a motel.As a condition of his employment, Randy is required to live in a room on the premises so that he would be there in case of emergencies.Randy considered this a fringe benefit since he would otherwise be required to pay $800 per month rent.The room that Randy occupied normally rented for $70 per night, or $2,100 per month.On the average, 90% of the motel rooms were occupied.As a result of this rent-free use of a room, Randy is required to include in gross income.

• A)$-0-.
• B)$800 per month.
• C)$2,100 per month.
• D)$1,890 ($2,100 × 0.90).
• E)None of these.

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Definitions:

Tariffs

Taxes imposed by a government on imported or exported goods.

Foreign Products

Goods or services that are produced in one country and sold to consumers in other countries.

Gross Domestic Product

The total value of all goods and services produced within a country in a specific time period, used as a broad measure of economic activity and health.

Free Trade

An economic policy that allows imports and exports to occur without governmental tariffs, quotas, or other restrictions, promoting international trade.