Based on 20 years of experience, a business deducted the future estimated cost of honouring discount coupons distributed to customers. Which of the following statements would be true in respect of the discount? Multiple Choice If reasonable, it would be deductible in the current year. It would not be tax deductible as it is reserve, not specifically allowed by the Income Tax Act. It would be considered capital and not all of it would be currently deductible, as it would also benefit future sales and therefore long-term.. It would be currently deductible, as its purpose is to earn income.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Based on 20 years of experience, a business deducted the future estimated cost of honouring discount coupons distributed to customers. Which of the
following statements would be true in respect of the discount?
Multiple Choice
If reasonable, it would be deductible in the current year.
It would not be tax deductible as it is a reserve, not specifically allowed by the Income Tax Act.
It would be considered capital and not all of it would be currently deductible, as it would also benefit future sales and therefore long-term..
It would be currently deductible, as its purpose is to earn income.
Transcribed Image Text:Based on 20 years of experience, a business deducted the future estimated cost of honouring discount coupons distributed to customers. Which of the following statements would be true in respect of the discount? Multiple Choice If reasonable, it would be deductible in the current year. It would not be tax deductible as it is a reserve, not specifically allowed by the Income Tax Act. It would be considered capital and not all of it would be currently deductible, as it would also benefit future sales and therefore long-term.. It would be currently deductible, as its purpose is to earn income.
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