Ivory Fast Delivery Company,an accrual basis taxpayer,frequently has claims for damages to property the company delivered.Often the claim is not filed until a month after the delivery.In the past,approximately 80% of the claims are paid by Ivory.At the end of 2010,$19,000 in claims had been filed.The company refused to pay $4,000 of the claims,and paid the other $15,000 of claims in January 2011.Also,in January 2011,claims for $13,000 were filed for deliveries made in 2010,and $10,000 was paid on these claims by March 2011.Ivory has elected to use the recurring item exception to economic performance.Under the all-events test,Ivory can accrue as an expense for 2010:

Question

Quizplus · Accepted Answer

The Answer of Ivory Fast Delivery Company,an accrual basis taxpayer,frequently has claims for damages to property the company delivered.Often the claim is not filed until a month after the delivery.In the past,approximately 80% of the claims are paid by Ivory.At the end of 2010,$19,000 in claims had been filed.The company refused to pay $4,000 of the claims,and paid the other $15,000 of claims in January 2011.Also,in January 2011,claims for $13,000 were filed for deliveries made in 2010,and $10,000 was paid on these claims by March 2011.Ivory has elected to use the recurring item exception to economic performance.Under the all-events test,Ivory can accrue as an expense for 2010:

Ivory Fast Delivery Company,an Accrual Basis Taxpayer,frequently Has Claims for Damages