Office Palace, Inc

question 49

Multiple Choice

Office Palace, Inc., leased an all-in-one printer to a new customer, Ashley, on December 27, 2018. The printer was to rent for $600 per month for a period of 36 months beginning January 1, 2019. Ashley was required to pay the first and last month's rent at the time the lease was signed. Ashley was also required to pay a $1,500 damage deposit. Office Palace must recognize as income for the lease:

• A) $0 in 2018, if Office Palace is an accrual basis taxpayer.
• B) $7,800 in 2019, if Office Palace is a cash basis taxpayer.
• C) $2,700 in 2018, if Office Palace is a cash or accrual basis taxpayer.
• D) $1,200 in 2018, if Office Palace is a cash or accrual basis taxpayer.
• E) None of these.

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Definitions:

Acid-fast Bacilli

A group of bacteria, including Mycobacterium tuberculosis, that resist decolorization by acids after being stained, used in diagnosing tuberculosis and other infections.

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The maximum amount of air a person can expel from the lungs after a maximum inhalation.

Thoracoplasty

A surgical procedure involving the removal of ribs to collapse part of the lungs for the treatment of tuberculosis or other lung diseases.

Thyroid Cartilage

The largest cartilage of the larynx, commonly known as the Adam's apple, playing a key role in protecting the vocal cords and the entrance to the trachea.