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AICPA Exam CPA-Financial Topic 3 Question 1 Discussion
Topic #: 3
In Yew Co.'s 1992 annual report, Yew described its social awareness expenditures during the year as follows:
"The Company contributed $250,000 in cash to youth and educational programs. The Company also gave $140,000 to health and human-service organizations, of which $80,000 was contributed by employees through payroll deductions. In addition, consistent with the Company's commitment to the environment, the Company spent $100,000 to redesign product packaging."
What amount of the above should be included in Yew's income statement as charitable contributions expense?
Choice "a" is correct. Charitable contributions include amounts the company gave to recognized charities. This includes:
Note: Of the $140,000, employees gave $80,000, and the company $60,000. Redesigning packaging is not a contribution to a charity.
Choice "b" is incorrect. The company gave only $60,000 of the $140,000. Employees gave $80,000.
Choice "c" is incorrect. Redesigning packaging is not a contribution to a charity.
Choice "d" is incorrect. The company gave only $60,000 of the $140,000. Employees gave $80,000.
Redesigning packaging is not a contribution to a charity.
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