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Accounting
Daisy Corporation,

Daisy Corporation,

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Daisy Corporation, a calendar year accrual method taxpayer, manufactures and sells life - like plastic flowers A. Daisy is sued by a customer, Catherine, who is injured in 2024 when she slips and falls on Daisy Corporation's sidewalk. Daisy Corporation settles the lawsuit in 2025 by agreeing to pay Catherine S 100,000. The $100,000 payment is made to Catherine in 2026. in which year is the $100,000 deductible in Daisy Corporation's return? Please explain. B. Daisy offers to refund the price of a flower to a purchaser not satisfied with their flower During 2024, 200 purchasers request a refund of the $100 purchase price. Daisy refunds$10,000 on June 30, 2025 and $10,000 on November 15, 2025. Daisy timely files its federal income tax return for each taxable year on the extended due date for the return. Daisy adopted the recurring item exception with respect to refunds. Explain when the $20,000 refund is deductible by Daisy.
Transcribed Image Text:Daisy Corporation, a calendar year accrual method taxpayer, manufactures and sells life - like plastic flowers A. Daisy is sued by a customer, Catherine, who is injured in 2024 when she slips and falls on Daisy Corporation's sidewalk. Daisy Corporation settles the lawsuit in 2025 by agreeing to pay Catherine S 100,000. The $100,000 payment is made to Catherine in 2026. in which year is the $100,000 deductible in Daisy Corporation's return? Please explain. B. Daisy offers to refund the price of a flower to a purchaser not satisfied with their flower During 2024, 200 purchasers request a refund of the $100 purchase price. Daisy refunds$10,000 on June 30, 2025 and $10,000 on November 15, 2025. Daisy timely files its federal income tax return for each taxable year on the extended due date for the return. Daisy adopted the recurring item exception with respect to refunds. Explain when the $20,000 refund is deductible by Daisy.
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