Marvin’s Mighty Maples, a minor league baseball team located in Vermont, sells season tickets to its games which are scheduled a year in advance. Season tickets for first tier seats are $5,000 per year. The Maples’ season runs from April to September. The Maples operate on the accrual basis and have a fiscal year that ends on June 30.Marvin’s Maples may not defer that portion of the season ticket sales that relate to the next fiscal year, as prepaid income must be recognized when received.Marvin’s Maples may defer that portion of the season ticket sales that relate to the next fiscal year, because it is an accrual taxpayer.Marvin’s Maples may defer that portion of the season ticket sales that relate to the next fiscal year because when income will actually be earned is not required to be estimated.Marvin’s Maples may not defer that portion of the season sales that relate to the next fiscal year because they are required to use a calendar year.

ANSWER :- Option 2 Marvin’s Maples may defer that portion of the season ticket sales that relate to the next fiscal year, because it is an accrual taxpayer. Explanation:- Marvin's Maples may defer that portion of the season ticket sales that relate ti the next fiscal year because it is an accrual basis taxpayer. An accrual basis taxpayer recognizes income when it is earned not when it is recieve. WRONG OPTIONS:- 1. Marvin’s Maples may not defer that portion of the season ticket sales that relate to the next fiscal year, as prepaid income must be recognized when received. 3. Marvin’s Maples may defer that portion of the season ticket sales that relate to the next fiscal year because when income will actually be earned is not required to be estimated. 4. Marvin’s Maples may not defer that portion of the season sales that relate to the next fiscal year because they are required to use a calendar year. EXPLANATION FOR WRONG OPTIONS :- According to the given question Marvin's Maples may defer that portion of the season ticket sales that relate ti the next fiscal year because it is an accrual basis taxpayer. An accrual basis taxpayer recognizes income when it is earned not when it is recieve. The remaining options is not suitable for the given situation so the option 2 is correct

Answered: Marvin’s Mighty Maples, a minor league…

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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Marvin’s Mighty Maples, a minor league baseball team located in Vermont, sells season tickets to its games which are scheduled a year in advance. Season tickets for first tier seats are $5,000 per year. The Maples’ season runs from April to September. The Maples operate on the accrual basis and have a fiscal year that ends on June 30.

Marvin’s Maples may not defer that portion of the season ticket sales that relate to the next fiscal year, as prepaid income must be recognized when received.
Marvin’s Maples may defer that portion of the season ticket sales that relate to the next fiscal year, because it is an accrual taxpayer.
Marvin’s Maples may defer that portion of the season ticket sales that relate to the next fiscal year because when income will actually be earned is not required to be estimated.
Marvin’s Maples may not defer that portion of the season sales that relate to the next fiscal year because they are required to use a calendar year.

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