On December 1,2014,Delilah Borrows $2,000 from Her Credit Union to Use

question 6

Essay

On December 1,2014,Delilah borrows $2,000 from her credit union to use in her business.Under the terms of the contract,Delilah actually receives $1,940 but is required to repay $2,000 in three months.
a.What amount may Delilah deduct as interest expense in 2014 and in 2015 if she is a cash basis taxpayer?
b.What amount may Delilah deduct as interest expense in 2014 and in 2015 if she is an accrual basis taxpayer?

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Definitions:

Public Company Accounting Oversight Board

An independent oversight body responsible for supervising the audits of public companies to protect investors and the public interest.

Whistle-Blowing Protection

Legal safeguards for employees who expose wrongdoing, corruption, or illegal activities within their organization.

Golden Rule

An ethical principle suggesting that one should treat others as one's self would wish to be treated.

Freedom

The power or right to act, speak, or think as one wants without hindrance or restraint.