Steve Is an Employee of Giant Valley Auto City

question 14

Multiple Choice

Steve is an employee of Giant Valley Auto City. The company allows all employees to receive a 35% discount on service to their personal vehicles. Steve paid $975 for work done on his truck that normally costs $1,500. How much gross income must Steve recognize because of the discount?

• A)$- 0 -
• B)$225
• C)$300
• D)$525
• E)$975

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Definitions:

Fair Value Enterprise Method

A valuation technique that estimates the price at which an entire business would change hands, reflecting the present value of future earnings.

Total Assets

represent the summation of everything a company owns, both current and non-current, that can be used for paying debts, investments, or other operations.

Fair Value Enterprise Method

A methodology for valuation that estimates the value of an entire enterprise as if it were traded in the market, based on the fair value of its assets and liabilities.

Consolidated Balance Sheet

A financial statement that aggregates the financial position of a parent company and its subsidiaries, presenting them as a single economic entity.