Mike Contracted with Kram Company, Mike's Controlled Corporation

question 53

Multiple Choice

Mike contracted with Kram Company, Mike's controlled corporation.Mike was a medical doctor and the contract provided that he would work exclusively for the corporation.No other doctor worked for the corporation.The corporation contracted to perform an operation for Rosa for $8,000.The corporation paid Mike $6,500 to perform the operation under the terms of his employment contract.

• A)Mike's gross income is $6,500.
• B)Mike must recognize the $8,000 gross income because he provided the service.
• C)Mike must recognize $8,000 gross income since the patient obviously wanted him to perform the operation.
• D)The Kram Company corporation's gross income is $1,500.
• E)None of the above.

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Definitions:

Periodic Bond Interest Payments

The regular interest payments made to bondholders during the life of the bond.

Present Value

The immediate value assigned to a future sum of money or cash movements, based on a particular return rate.

Interest Period

The duration over which interest is calculated on a loan or investment, which could be monthly, quarterly, semiannually, or annually.

Bond Indenture

A legal document specifying the terms, conditions, and details of a bond issued by a corporation or government entity.