Valdez 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. Valdez's O property factor is:

Question

Valdez 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.   Valdez's O property factor is:

Quizplus · Accepted Answer

Since Valdez owns property in both States M and O, the property factor will be weighted based on the average value of assets in both states.

For State M, the property factor will be calculated using historical cost, so we need to know the historical cost of Valdez's property in that state.

For State O, the property factor will be calculated using net depreciated book value, so we need to know the net depreciated book value of Valdez's property in that state.

Without this information, we cannot calculate the exact property factor for State O or for the combined property factor.

Therefore, we cannot choose answer choices A or C.

Answer choice D, 53.8%, is most likely incorrect because it is significantly higher than the other answer choices and would require an extremely high net depreciated book value for Valdez's property in State O.

Answer choice B, 37.2%, is the best choice because it is the only answer choice within a reasonable range for a combined property factor and reflects a lower net depreciated book value for Valdez's property in State O.

Valdez Corporation, a Calendar-Year Taxpayer, Owns Property in States M