Question 1

Company A operates in State X and State Y. State X uses a single-sales factor apportionment formula. State Y uses an equal-weighted three-factor formula (Property, Payroll, Sales).
Company Data:
- Total Sales: $1,000,000 (State X: $800,000)
- Total Payroll: $500,000 (State X: $100,000)
- Total Property: $2,000,000 (State X: $100,000)

What is the apportionment percentage for State X?

Accepted Answer

1. Identify State X Formula: Single-Sales Factor.
2. Identify Relevant Data: Sales in X ($800k), Total Sales ($1M).
3. Calculate: $800,000 / $1,000,000 = 80%.
4. Ignore Payroll and Property for State X.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Calculating a three-factor average when the state uses single-sales factor.

How to approach this question

Full Answer

Common mistakes

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