A) State the value of the business at the beginning period
B) Determine the rate of return
C) Calculate the return on average capital (Capital factor: A x B)
D) Determine the reasonable compensation for labor (Labor factor)
E) Calculate the total allocation base (Capital plus labor: C + D)
F) Calculate the percent of annual income allocation base attributable to capital (C/E)
G) Calculate the percent of annual income allocation base attributable to labor (D/E)
H) State the increase or decrease in value
I) Calculate the annual income allocated to capital (F x H)
J) Determine the annual income allocated to labor (G x H)
K) Calculate the net annual separate income from capital (H – J)
L) List the beginning separate capital (Prior year’s M)
M) Calculate the separate capital (K + L)
N) List the beginning community property (prior year’s O)
O) Calculate the ending community capital (J + N)
P) Calculate the ending total account balance (M + O)
