Pine City's year end is June 30.Pine levies property taxes in January of each year for the calendar year.One-half of the levy is due in May and one-half is due in October.Property tax revenue is budgeted for the period in which payment is due.The following information pertains to Pine's property taxes for the period from July 1,20X4,to June 30,20X5:
Calendar Year

The $40,000 balance due for the May 20X5 installments was expected to be collected in August 20X5.What amount should Pine recognize for property tax revenue for the year ended June 30,20X5?

Question

Pine City's year end is June 30.Pine levies property taxes in January of each year for the calendar year.One-half of the levy is due in May and one-half is due in October.Property tax revenue is budgeted for the period in which payment is due.The following information pertains to Pine's property taxes for the period from July 1,20X4,to June 30,20X5:
Calendar Year

The $40,000 balance due for the May 20X5 installments was expected to be collected in August 20X5.What amount should Pine recognize for property tax revenue for the year ended June 30,20X5?

Quizplus · Accepted Answer

Pine levies property taxes in January of each year for the calendar year, which means property tax revenue is recognized in the year it was levied, not the year it was collected. Therefore, for the period from July 1, 20X4 to June 30, 20X5, the recognized property tax revenue should be:

Calendar year 20X4: $2,000,000
Calendar year 20X5:
- January 20X5 levy: $2,000,000
- May 20X5 installment (1/2 of $2,200,000): $1,100,000

Total recognized property tax revenue = $5,100,000

Even though the remaining balance due for the May 20X5 installment was expected to be collected in August 20X5, it does not affect the recognition of revenue for the year ended June 30, 20X5.

Pine City's Year End Is June 30