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Murphy Uses the Accrual Method and Reports on a Calendar

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Murphy uses the accrual method and reports on a calendar year. This year, Murphy signed a binding contract to provide consulting services to Kirby beginning next year. Murphy incurred $15,000 to train his staff for this particular project. In addition, Murphy estimates that he will incur another $60,000 to complete the Kirby contract. What amount, if any, can Murphy deduct this year for the services expected to be rendered next year?


Definitions:

Xylem

the vascular tissue in plants that conducts water and dissolved nutrients upward from the root and also helps to form the woody element in the stem.

Transpiration

Plant’s loss of water to the atmosphere, mainly through evaporation at leaf stomata.

Petioles

The stalks that join a leaf to the stem of a plant.

Cabbage

A leafy green, red, or white biennial plant grown as an annual vegetable crop for its dense-leaved heads, belonging to the Brassica family.

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