On March 15,2009,Clarion Company paid property taxes of $60,000 on its factory building for calendar year 2009.On July 1,2009,Clarion made $40,000 in unanticipated repairs to its machinery.The repairs will benefit operations for the remainder of the calendar year.What total amount of these expenses should be included in Clarion's quarterly income statement for the three months ended September 30,2009?
A)$55,000
B)$15,000
C)$35,000
D)$40,000

Question

Quizplus · Accepted Answer

The quarterly income statement for the three months ended September 30, 2009, should include property taxes of $15,000 ($60,000/4) and repairs of $20,000 ($40,000/2) for a total of $35,000 (option C). The full amount of the property taxes should be included, but only half of the repairs as they only benefit operations for half of the calendar year. Therefore, options A and D are both incorrect. Option B is also incorrect as it does not take into account the property taxes paid.

On March 15,2009,Clarion Company Paid Property Taxes of $60,000 on Its