Brady Owns a Second Home That He Rents to Others

question 68

Multiple Choice

Brady owns a second home that he rents to others. During the year, he used the second home for 50 days for personal use and for 100 days for rental use. Brady collected $20,000 of rental receipts during the year. Brady allocated $7,000 of interest expense and property taxes, $10,000 of other expenses, and $4,000 of depreciation expense to the rental use. What is Brady's net income from the property and what type and amount of expenses will he carry forward to next year, if any?

• A)$0 net income. $1,000 depreciation expense carried forward to next year.
• B)($1,000)net loss. $0 expenses carried over to next year.
• C)$0 net income. $1,000 of other expense carried over to next year.
• D)$0 net income. $1,000 of interest expense and property taxes carried over to next year.

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Definitions:

Internal Expectancies

Beliefs or anticipations about the outcomes of one's actions, which can influence behavior and motivation.

Evaluates

Evaluates involves making judgments about the value, quality, outcome, or significance of something or someone based on evidence and criteria.

Cognitive-Social Theory

A theoretical perspective that emphasizes the role of cognitive processes in understanding social behavior.

Humanistic Theory

An approach in psychology that emphasizes empathy and stresses the good in human behavior.