Bigtown Advertising Agency, a calendar-year, accrual basis taxpayer, was paid $60,000 for a three-year advertising contract on July 1, 2017, and $36,000 for a 12-month contract on December 1, 2017 How much income must Bigtown recognize for these contracts in years 2016 and 2017, respectively?

Question

Quizplus · Accepted Answer

(6/36 x $60,000) + (1/12 x $36,000) = $13,000; $60,000 + $36,000 - $13,000 = $83,000

Bigtown Advertising Agency, a Calendar-Year, Accrual Basis Taxpayer, Was Paid