Murphy Uses the Accrual Method and Reports on a Calendar

question 106

Essay

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?

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Definitions:

Predictability

The extent to which future events or behaviors can be anticipated based on current knowledge or past events.

Stability

The quality of being stable; having consistency or permanence, and resistance to change or deterioration over time.

Continuity

The unbroken and consistent existence or operation of something over a period of time.

Peer Influence

The impact that peers, or individuals of similar age or status, have on each other's attitudes, values, and behaviors.