Seybert Systems Accounts for Its Investment in Wang Engineering as Available

question 112

Multiple Choice

Seybert Systems accounts for its investment in Wang Engineering as available for sale. Seybert's balance in accumulated other comprehensive income with respect to the Wang investment is a credit balance of $20,000, and they list the investment at $100,000 on their balance sheet. Seybert purchased the Wang investment for (ignore taxes) :

• A)$100,000.
• B)$120,000.
• C)80,000.
• D)cannot be determined from this information.fair value = $100,000 less unrealized gain of $20,000 = cost of $80,000.

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Definitions:

Regressive Tax

A tax whose burden, expressed as a percentage of income, falls as income increases.

Proportional Tax

A tax system where the rate remains constant regardless of the amount on which the tax is imposed.

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount subject to tax, causing taxpayers to pay the same percentage of their income irrespective of its size.

Deductions

Expenses subtracted from gross income to determine the taxable income.