Norman Corporation Owns and Operates Two Manufacturing Facilities,one in State

question 120

Multiple Choice

Norman Corporation owns and operates two manufacturing facilities,one in State X and the other in State Y.Due to a temporary decline in the corporation's sales,Norman has rented 20% of its Y facility to an unaffiliated corporation.Norman generated $600,000 net rental income and $2,400,000 income from manufacturing.
For X and Y purposes,rental income is classified as allocable nonbusiness income.By applying the statutes of each state,Norman determined that its apportionment factors are .75 for X and .25 for Y.
Norman's income attributed to X is:

• A)$0.
• B)$1,800,000.
• C)$2,250,000.
• D)$2,400,000.
• E)$3,000,000.

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Definitions:

Capital Gains

Capital gains arise from the sale of an asset at a price higher than its purchase price, resulting in a profit.

Market Value

The current price at which an asset or a service can be bought or sold in an open market.

Investments

Assets purchased with the expectation that they will generate income in the future or appreciate in value for future resale.

Operating Cash Flow

The revenue generated by a company through its primary business functions.