Gabe Corporation, an Accrual- Basis Taxpayer That Uses the Calendar

question 603

Essay

Gabe Corporation, an accrual- basis taxpayer that uses the calendar year as its tax year, sells CPE (continuing professional education) courses under contracts ranging from three months to two years. Assume that Gabe Corporation sold three contracts on July 1, 2018: one for six months costing $300; one for one year costing $500; a for two years costing $800.
Required: What is the minimum amount of income that must be recognized in 2018 and 2019?

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Definitions:

Rivalry Among Firms

A situation where companies compete against each other in the same industry for market share, profits, and customer loyalty.

Brick-and-mortar Stores

Physical retail locations where customers can visit to view and purchase goods in person.

Two Competitors

Entities, especially businesses, engaged in a rivalry in the same industry or sector, striving to achieve goals such as higher sales, market share, or innovation.

Rivalry

Competition or conflict between two or more parties, often for dominance or superiority in a specific area.