Bert Corporation,a calendar-year taxpayer,owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost,and O requires that the property be included in the property factor at its net depreciated book value. Account Balances at Beginning of Year State M State O Totals Inventories $200,000 $300,000 $ 500,000 Building & machinery (cost) 700,000 300,000 1,000,000 Accumulated depreciation (150,000) (50,000) (200,000) Land 400,000 200,000 600,000 Totals $1,150,000 $750,000 $1,900,000 Account Balances at Year-End State M State O Totals Inventories $ 400,000 $100,000 $ 500,000 Building & machinery (cost) 800,000 500,000 1,300,000 Accumulated depreciation (300,000) (100,000) (400,000) Land 400,000 200,000 600,000 Totals $1,300,000 $700,000 $2,000,000 Annual rent payments $ 50,000 $ 25,000 Bert's State M property factor is:

Question

Bert Corporation,a calendar-year taxpayer,owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost,and O requires that the property be included in the property factor at its net depreciated book value. Account Balances at Beginning of Year State M State O Totals Inventories $200,000 $300,000 $ 500,000 Building & machinery (cost) 700,000 300,000 1,000,000 Accumulated depreciation (150,000) (50,000) (200,000) Land 400,000 200,000 600,000 Totals $1,150,000 $750,000 $1,900,000 ​ Account Balances at Year-End State M State O Totals Inventories $ 400,000 $100,000 $ 500,000 Building & machinery (cost) 800,000 500,000 1,300,000 Accumulated depreciation (300,000) (100,000) (400,000) Land 400,000 200,000 600,000 Totals $1,300,000 $700,000 $2,000,000 Annual rent payments $ 50,000 $ 25,000 Bert's State M property factor is:

Quizplus · Accepted Answer

To calculate the property factor for State M, we need to find the average value of the property in State M and divide it by the total average value of the property. For State M, the average value is calculated using historical cost: [(Beginning Inventory + Ending Inventory)/2 + (Beginning Building & Machinery + Ending Building & Machinery)/2 + Land] = [(200,000 + 400,000)/2 + (700,000 + 800,000)/2 + 400,000] = 1,400,000. The total average value is calculated similarly for both states: [(500,000 + 500,000)/2 + (1,000,000 + 1,300,000)/2 + 600,000] = 2,156,250. The property factor for State M is 1,400,000 / 2,156,250 = 64.9%.

Bert Corporation,a Calendar-Year Taxpayer,owns Property in States M and O