Assume that you have a client which does lawn care activities for major companies. They are really good at lawn care and have a following from local businesses. The Ortez Company, to become a client, prepays Ace Company $18,000 on March 31, 2023, for lawn care services for the calendar years 2023, 2024 and 2025. Assume the revenue is to be recognized by Ace Company, under the accrual method, equally over the three year period. When and what amounts would Ace Company recognize this advanced payment for services on its corporate tax returns for 2023, 2024 and 2025?
Assume that you have a client which does lawn care activities for major companies. They are really good at lawn care and have a following from local businesses. The Ortez Company, to become a client, prepays Ace Company $18,000 on March 31, 2023, for lawn care services for the calendar years 2023, 2024 and 2025. Assume the revenue is to be recognized by Ace Company, under the accrual method, equally over the three year period. When and what amounts would Ace Company recognize this advanced payment for services on its corporate tax returns for 2023, 2024 and 2025?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume that you have a client which does lawn care activities for major companies. They are really good at lawn care and have a following from local businesses. The Ortez Company, to become a client, prepays Ace Company $18,000 on March 31, 2023, for lawn care services for the calendar years 2023, 2024 and 2025. Assume the revenue is to be recognized by Ace Company, under the accrual method, equally over the three year period. When and what amounts would Ace Company recognize this advanced payment for services on its corporate tax returns for 2023, 2024 and 2025?
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