CT Computer Corporation, an accrual basis taxpayer, sells service contracts on the computers it sells. At the beginning of January of this year, CT Corporation sold contracts with service to begin immediately: The amount of income CT Corporation must report for this year is

Question

CT Computer Corporation, an accrual basis taxpayer, sells service contracts on the computers it sells. At the beginning of January of this year, CT Corporation sold contracts with service to begin immediately:  The amount of income CT Corporation must report for this year is

Quizplus · Accepted Answer

CT Corporation must report the full $1,680 in income for this year because they sold service contracts with service beginning immediately, meaning that they have already earned the revenue and must recognize it in the current period.

CT Computer Corporation, an Accrual Basis Taxpayer, Sells Service Contracts