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Dear Tutor, i have another question shown as follows:
……non-saving income…………..saving income…………..dividend income………… total
(a)…..160,000…………………………..3,600……………………….11,000………………….174,600
(b)…….93,000…………………………..3,600……………………….11,000………………….107,600
method one:
(a) no PA because 174,600 exceeds 120,000.
(b) 10,000-1/2(107,600-100,000)=6200
method two:
(a) no PA because (160,000+3,600) 163,600 exceeds 120,000
(b) PA 10,000 available it didn’t need to be adjusted, becuase (93,000+3,600) 96,600 didn’t exceed 100,000.
would you please tell me which method is right, because i checked note and BBP practice kit, they use both method,some time they included dividends and some time they excluded it. are there any rule about how to calculate them?
many thanksthank you Kpmg, but i checked the note chapter 2 example 17, by using method two, if using method one, the answer will be different from note, i am very confused because two method will lead to different PA result in some circumstance, for example (b) i mentioned above.
many thanksYour method 2 is wrong and example 17 is correctly answered but have you understood the calculation of “Adjusted Net Income”!?
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