Eric and Tina have been friends since high school. Tina and her husband would regularly socialise with Eric and his wife. On Eric's birthday, every year Tina would buy him a birthday present worth somewhere between $50 and $100. Eric's full-time job is as an obstetrician at a major public hospital. When Tina was giving birth, coincidentally Eric was the obstetrician on duty. The birth was subject to complications and it was only Eric's high level of competence and medical skill that saved the baby's life. A month later, when Eric's birthday came around, Tina bought him an expensive watch valued at $4,000. With it she gave him a card that read "Thanks for being a great friend and lifesaver". She also gave the two nurses who assisted Eric in delivering her child necklaces worth $800 each. ignoring capital gains tax, discuss whether receipt of the watch constitutes assessable income for Eric.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Eric and Tina have been friends since high school. Tina and her husband would regularly socialise with Eric and
his wife. On Eric's birthday, every year Tina would buy him a birthday present worth somewhere between $50
and $100. Eric's full-time job is as an obstetrician at a major public hospital. When Tina was giving birth,
coincidentally Eric was the obstetrician on duty. The birth was subject to complications and it was only Eric's
high level of competence and medical skill that saved the baby's life. A month later, when Eric's birthday came
around, Tina bought him an expensive watch valued at $4,000. With it she gave him a card that read "Thanks for
being a great friend and lifesaver". She also gave the two nurses who assisted Eric in delivering her child
necklaces worth $800 each. ignoring capital gains tax, discuss whether receipt of the watch constitutes
assessable income for Eric.
Transcribed Image Text:Eric and Tina have been friends since high school. Tina and her husband would regularly socialise with Eric and his wife. On Eric's birthday, every year Tina would buy him a birthday present worth somewhere between $50 and $100. Eric's full-time job is as an obstetrician at a major public hospital. When Tina was giving birth, coincidentally Eric was the obstetrician on duty. The birth was subject to complications and it was only Eric's high level of competence and medical skill that saved the baby's life. A month later, when Eric's birthday came around, Tina bought him an expensive watch valued at $4,000. With it she gave him a card that read "Thanks for being a great friend and lifesaver". She also gave the two nurses who assisted Eric in delivering her child necklaces worth $800 each. ignoring capital gains tax, discuss whether receipt of the watch constitutes assessable income for Eric.
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education