Ajax Computer Company Is an Accrual Method Calendar Year Taxpayer

question 52

Multiple Choice

Ajax Computer Company is an accrual method calendar year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $1 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $500,000 for advertising time during a professional golf tournament which will occur once in April of next year. What amount of these payments, if any, can Ajax deduct this year?

• A) $1 million
• B) $500,000
• C) $1.5 million
• D) $1.5 million only if the professional golf tournament is played before April 15
• E) No deduction can be claimed this year

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Definitions:

Point Estimate

A single value estimate for a population parameter derived from a sample.

Population Mean

The average value of a population's characteristics.

Standard Deviation

A statistical metric that quantifies the variation or dispersion of a set of data points from the mean.

Mean Content

The average value or quantity present in a given set of data or material.