After Years of Working with the Orphanage and the Government

question 84

Multiple Choice

After years of working with the orphanage and the government, Walt and Kim adopted a little girl from China. The adoption process, which became final in January 2015, incurred the following qualified adoption expenses. What amount of adoption credit can Walt and Kim claim and in what year? Assume there is no credit limitation due to their AGI amount.

• A) $15,300 in 2014.
• B) $12,500 in 2014 and $2,800 in 2015.
• C) $13,400 in 2015.
• D)$15,300 in 2015.

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Definitions:

Unit of Product

This term refers to a single complete product that is ready for sale or has passed through one complete stage of production.

Departmental Overhead Rate Method

An accounting method used to allocate overhead costs to specific departments based on relevant activity bases.

Overhead Resources

The ongoing operational costs required to run a business that are not directly tied to a specific product or service, such as rent, utilities, and general office supplies.

Activity Pool

A concept in cost accounting used to gather all costs associated with a certain activity, facilitating more accurate cost allocation.