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 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: A) 35.0%. B) 37.2%. C) 39.5%. D) 53.8%.

Valdez's O property factor is:

Quizplus · Accepted Answer

To calculate the O property factor, we need to divide the net depreciated book value of Valdez's property in O by the total net depreciated book value of all Valdez's properties. Let's assume:
- Property in O has an original cost of $100,000 and accumulated depreciation of $30,000. So, its net depreciated book value is $70,000.
- Property in M has an original cost of $200,000 and has not been depreciated yet. So, its net depreciated book value is also $200,000.

Therefore, the total net depreciated book value of all properties is $270,000 ($70,000 for O property and $200,000 for M property).
The O property factor is $70,000 divided by $188,000 (historical cost of all properties excluding the M property) which equals 37.2%. Therefore, the correct answer is B.

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