Heron Corporation, a Calendar Year C Corporation, Had an Excess

question 35

True/False

Heron Corporation, a calendar year C corporation, had an excess charitable contribution for 2013 of $5,000. In 2014, Heron made a further charitable contribution of $20,000. Heron's 2014 deduction is limited to $15,000 (10% of taxable income). The 2014 contribution must be applied first against the $15,000 limitation.

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Definitions:

Income Statement

A financial report that shows the company's revenues and expenses over a specific period, resulting in a net income or loss.

Trial-balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns that are equal, used to ensure the accuracy of financial transactions.

Insurance Expense

The cost allocated to a period for holding insurance policies, regarded as a non-operational expense in financial statements.

Prepaid Insurance

An asset account that reflects the amount of insurance premiums that have been paid in advance and are gradually recognized as an expense over the coverage period of the policy.