X Corp.holds property as follows: State A $\quad$State B
$\quad$Beginning of Year $\quad$End of Year $\quad$$\quad$Beginning of Year $\quad$End of Year
Cost $\$ 1,000,000 \quad \$ 1,500,000 \quad \$ 500,000 \quad\quad\quad \$ 500,000$
Accumulated depreciation $( \$ 200,000 ) \quad ( \$ 300,000 )$ $( \$ 100,000 ) \quad ( \$ 125,000 )$ The laws of State A provide for the use of average original cost in determining the property factor.What is X's State A property factor for the current year?
A)75%
B)66.67%
C)71.43%
D)72.07%
E)76.19%

Question

Quizplus · Accepted Answer

The State A property factor is calculated using the average original cost. The average original cost for State A is the average of the beginning and end of year costs: $(1,000,000 + 1,500,000) / 2 = 1,250,000$. The total average original cost for both states is $(1,000,000 + 1,500,000 + 500,000 + 500,000) / 2 = 1,750,000$. The property factor for State A is $1,250,000 / 1,750,000 = 0.7143$ or 71.43%.

X Corpholds Property as Follows: State A A \quad \quad State B

X Corpholds Property as Follows: State A A \quad $\quad$ State B