Eric Makes an Installment Sale of a Passive Activity Having

question 11

True/False

Eric makes an installment sale of a passive activity having suspended losses of $40,000.He collects 25% of the sales price in the current year, and will collect 25% in each of the next three years.Eric can deduct $10,000 of the passive loss this year.

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Definitions:

Direct Labor Hours

The total time workers spend producing goods or providing services that are directly associated with the production costs.

Manufacturing Overhead-Control

An account that records the actual overhead costs incurred in the manufacturing process, differing from allocated overhead.

Factory Supplies Inventory

Items stored by a manufacturing company that are necessary for the maintenance of machinery and the manufacturing process but are not part of the finished goods.

Work-In-Process

Work-in-process (WIP) refers to partially finished goods that are still in the production process at a manufacturing company's inventory.