Ridge Is the Manager of a Motel

question 31

Multiple Choice

Ridge is the manager of a motel. As a condition of his employment, Ridge is required to live in a room on the premises so that he would be there in case of emergencies. Ridge considered this a fringe benefit, since he would otherwise be required to pay $800 per month rent. The room that Ridge 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, Ridge is required to include in gross income.

• A)$0.
• B)$800 per month.
• C)$2,100 per month.
• D)$1,890 ($2,100 × .90).
• E)None of these.

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Definitions:

Objectives of Financial Reporting

The goals intended to be achieved through the disclosure of financial information, including providing insight into a company's financial health for decision-making purposes.

Internal Management

The process and practice of managing the internal operations and resources of an organization.

Security Analysts

Professionals who evaluate and report on the viability, stability, and profitability of businesses, stocks, and securities.

Specific Objective

A clearly defined and measurable goal that is designed to accomplish a particular task or outcome within a set timeframe.