Office Palace,Inc. ,leased an all-in-one printer to a new customer,Ashley,on December 27,2010.The printer was to rent for $700 per month for a period of 36 months beginning January 1,2011.Ashley was required to pay the first and last month's rent at the time the lease was signed.Ashley was also required to pay a $1,000 damage deposit.Office Palace must recognize as income for the lease:
A) $0 in 2010,if Office Palace is an accrual basis taxpayer.
B) $1,400 in 2011,if Office Palace is a cash basis taxpayer.
C) $2,400 in 2010,if Office Palace is a cash basis taxpayer.
D) $1,400 in 2010,if Office Palace is an accrual basis taxpayer.
E) None of the above.
Correct Answer:
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