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

question 128

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 1,2013; one for six months costing $300; one for one year costing $500; and one for two years costing $800.
Required: What is the minimum amount of income that must be recognized in 2013 and 2014?

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Definitions:

Eccentric Contraction

A type of muscle contraction that occurs when the muscle elongates while under tension, often associated with controlled lowering movements.

Lengthens

The process of extending in length or duration; to make or become longer.

Muscle-group Split

A workout strategy that involves training different muscle groups on different days to allow each group time to recover.

Bodybuilders

Individuals who engage in intensive physical training and dieting to build, sculpt, and maintain muscular physique.