Question

The Crown Howe accounting firm rents a skybox at Lucas Oil Field where the Indianapolis Colts plays their home games. The cost of the skybox for the season is $80,000 and includes 8 tickets to each game. The team plays 10 games a year at the arena. The most expensive non-luxury box seat is $200. After acquiring a new accounting client, the managing partner invites 5 business associates to watch a game in the firm skybox. What amount can Crown Howe deduct as an entertainment expense?

Answer 1

Answer:

Entertainment expense is $1,200

Explanation:

The expense incurred is for the particular game the managing partner watched with 5 associates.

The amount paid for one game is the total amount to rent per year divided by the number of games in a year

One game cost= 80,000 ÷ 10= $8,000

So $8,000 is for 8 tickets. Therefore one ticket is $1,000.

The most expensive non-luxury box seat is $200.

So the total expense will be the cost of the ticket plus the cost of the box seat

Expense= 1,000+ 200= $1,200