A Small Office Building Is Purchased of $1,200,000 with a Balloon

question 28

Multiple Choice

A small office building is purchased of $1,200,000 with a balloon mortgage that is due at the end of year 10. Payments are based on a 25 year amortization period. If one point was charged, what annual amount can be deducted for tax purposes?

• A) $1,200
• B) $480
• C) $0
• D) $800

---

Definitions:

Earned

Income or revenue that has been realized through the sale of goods or services.

Fiscal Year

A twelve-month period used for accounting purposes and preparing financial statements, which may or may not align with the calendar year.

Calendar Year

A calendar year refers to the one-year period beginning on January 1 and ending on December 31, used for most civil purposes and by many businesses for accounting and taxation.

Interim Financial Statements

Interim financial statements are reports covering a less than full fiscal year, typically quarterly or half-yearly, providing insight into a company's financial performance during the period.