On January 1, Father (Dave) Loaned Daughter (Debra) $100,000 to Purchase

question 35

Multiple Choice

On January 1, Father (Dave) loaned Daughter (Debra) $100,000 to purchase a new car and to pay off college loans. There were no other loans outstanding between Dave and Debra.The relevant Federal rate on interest was 6 percent.The loan was outstanding for the entire year.

• A)If Debra has $15,000 of investment income, Dave must recognize $6,090 of imputed interest income.
• B)Dave must recognize $6,090 of imputed interest income regardless of the amount of Debra's investment income.
• C)Debra must recognize $6,090 of imputed interest income.
• D)Debra must recognize $6,090 of imputed interest income if Dave has at least $6,090 of investment income.
• E)None of these.

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Definitions:

Straight Line

The shortest distance between two points, often used to describe a method of linear depreciation in accounting.

Cumulative Share

The total percentage or portion of something that accumulates over time or through successive additions.

Families Earned

Refers to the income generated by household members through employment or other sources of earnings.

Income

Financial earnings received by an individual or entity, typically measured over a set period and derived from work, investments, or other sources.