GH&F Is a Calendar Year, Accrual Basis Taxpayer

question 7

Multiple Choice

GH&F is a calendar year, accrual basis taxpayer. In October 2015, GH&F received a $18,000 cash payment from a tenant who leases space in a commercial office building that GH&F owns. The payment was rent for the 18-month period beginning on November 1, 2015. As a result of the payment, GH&F should report:

• A) $2,000 book income and taxable income
• B) $2,000 book income and $18,000 taxable income
• C) $18,000 book income and taxable income
• D) None of the above

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Definitions:

Revaluation

An adjustment of the book value of an asset or currency to its fair market value, often affecting the financial statements of a company.

Zebrafish

A tiny fish that thrives in freshwater, frequently utilized in scientific studies because of its clear embryos and fast growth rate.

IFRS 9 Financial Instruments

It refers to an International Financial Reporting Standard that deals with the recognition, measurement, impairment, and derecognition of financial assets and liabilities.

Realized Gains

Profits that result from selling an asset at a higher price than its cost.