Using the Legend Provided, Classify Each Statement Accordingly

question 71

Short Answer

Using the legend provided, classify each statement accordingly. In all cases, assume that taxable income is being adjusted to arrive at current E & P for 2018.
a. Increase
b. Decrease
c. No effect
-Premiums paid on key employee life insurance policy (assume no increase in cash surrender value of policy) in 2018.

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Definitions:

Ownership Percentage

This refers to the fraction or percentage of a company or asset that is owned by a particular shareholder or investor.

Voting Stock

Shares of a company that grant the shareholder the right to vote on company matters, such as electing the board of directors, at shareholder meetings.

Available-For-Sale

A classification for financial assets indicating that they can be sold in the future but are not held for active trading or intended to be held to maturity.

Net Income

This is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, often referred to as the bottom line.